Stock Costing

Owned by Malcolm Mackay
Last updated: Dec 13, 2024 by Bao TRINH
4 min read

Each stock item in each stock location has a Unit Cost Rate (which is the cost for one unit of the item), and this can be different for the same item in different stock locations. The Unit Cost Rate is used in 2 areas:

  • stock transactions - stock issues, returns, transfers and stocktake adjustments are costed at the prevailing Unit Cost Rate

  • stock valuation - the value of stock, at a period end or in fact at any time, is taken to be the Quantity on Hand * Unit Cost Rate

 

Unit Cost Rate

There are 3 different ways the Unit Cost Rate can be calculated, and this is determined by the Stock cost method Control Parameter.

  1. Standard - this is a fixed unit cost rate which can be manually maintained on each stock item, or optionally at the item / location level. There are imports available to bulk update standard costs from a spreadsheet.

  2. Last - this is the most recent actual unit cost rate as recorded on AP Invoices where there are purchases of stock items against stock locations. The Last Cost is automatically updated on all included items as soon as the AP Invoice is approved.

  3. Period Average - this is a calculated average cost, considering the quantity and value of stock at the start of the period, and any stock receipts since. It also takes account of stock value adjustments and stock transfers, where stock is moved from one stock location to another.

Note

  • Irrespective of which of these methods is used, all 3 unit cost rates are always maintained and calculated for each item / location. These 3 rates are shown on the Location subgrid of the Stock List, with the operative costing method indicated.

  • At the end of each period (month), a stock closeout process is performed which takes a snapshot of the stock position for each stock item / location. This includes the current Standard, Last and Average Unit Cost Rates, the Quantity of Stock of Hand, and the calculated Stock Value.

  • When a stock transaction (generally a stock issue) is entered, the prevailing Unit Cost Rate is used to cost the transaction. This determines the cost which will be applied to the job which the stock item is being issued to. If the Unit Cost Rate changes during the period, perhaps because a stock receipt has been recorded at a new purchase cost, then different stock issues may have different Unit Cost Rates for the same stock item. The standard wbRepriceTransactions may be used set the Unit Cost Rate on stock issues in the period to the current cost rate, as long as they haven’t been exported of course.

  • A wbUpdateAllStockCosts utility is available. It recalculates and repopulates the Last and Average Cost Rates on all stock items and locations. It should not need to be used in normal circumstances as these rates are updated in real time as transactions are entered.

Last Cost

The Last Cost updated from the actual costs recorded on AP Invoices which include purchases for stock. This happens as soon as the AP Invoice is approved.

FC Stock Purchases

When a stock receipt cost accrual (JobTransactions) record is created from an inwards goods, where the PO was raised in a foreign currency, the LC Cost is calculated from the FC Cost using the current currency exchange rate. The exception is where the PO line being receipted is from a PO with a fixed exchange rate, in which case the conversion is at the PO exchange rate.

Stock Returns

When entering stock returns, system displays the unit cost as currently, but allow it to be edited. This is to enable the return to be made for the same value as the original issue and avoid leaving a residual balance on the job.

Standard Cost Import

A new import function enables standard costs, by item or item / location, to be populated from an import spreadsheet.

Recosting Utility

A wbUpdateAllStockCosts utility is provided to recalculate and repopulate the Last and Average Cost Rates on all stock items and locations. It should not need to be used in normal circumstances as these rates are updated in real-time as transactions are entered. This utility is for Administrator only.

 

Stock costing and Docket Fuel Receipts

When fuel is delivered and recorded in a Fuel Receipts line type in dockets for a stock job (where the job is a stock location), the system will automatically generate a stock transaction and create a stock adjustment to account for the fuel. The average cost of fuel will then include all stock value adjustments, whether positive or negative, while continuing to exclude stocktake adjustments.

To record a stock adjustment, the job must be a Stock Location Job.

 

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