2 Replies Latest reply on Dec 18, 2007 2:06 PM by Carl Lewis

    Item Cost & Prices

    Eric Schroeder

      I am looking for same help in understanding SBO Item Cost & Prices. It is my understanding that for the GL transactions the Item Cost is used for valuation of transactions. For inventory Goods Issue and Goods Receipt transactions the only valuations available are Last Eval Price, Last Purchase Price and Price lists 1 - 10. Also on the Bills of Material these are the only selections available. We are using Standard Costs so when we make these transactions we want the value used to be the Item Cost.

      What is the Last Evaluated Price?  Where does it come from?? If it is changed in the Inventory Revaluation module one line at a time how can we effectively get all items revalued so that Last Eval Price and Item Cost are one and the same? (Note we have 29,000 items) Is there some way to get the Item Cost to be the same as the Last Evaluated Price??

      This area is very confusing. Why isn't Item Cost one of the selections along with the others? Is SAP aware of this problem? Are they planning to do anything about it?

      Any insight or advice would be appreciated. Thanks

        • 1. RE: Item Cost & Prices
          Matt Roberts

          Eric,

          Last Evaluated Price comes from your inventory valuation method, which is defined under Administration -> System Initialization -> Company Details -> Basic Initialization. There are several options, from FIFO (First-In-First-Out), LIFO (Last-In...), Moving Average, and so forth. Last Purchase Price should certainly be the price that you paid for the item on your most recent purchase order.

          The "Item Cost" (as used for transactions - sales, inventory valuations, etc.) is probably defined differently based on which costing / valuation method you selected at initialization. Ours pulls the Last Purchase Price as the item cost; we are using Moving Average. But I haven't tested various valuation methods to see what the effects are, so I couldn't tell you how the otehr methods affect the transactions.

          • 2. RE: Item Cost & Prices
            Carl Lewis

            Matt:

            Costing in any system can be confusing and in Business One it is not different. The Last Evaluated "Cost" (SAP B1 get price and costs kind of twisted up) is really controlled by the system. It is not equal to Standard or Average. It really refelcts the last trasaction posted in the system which recorded a "cost" for the item.

            You may have standard cost of 1.00 on an item, but the last time you received it, the recorded cost on the receipt was 1.10. That makes the Last Evaluated Cost (Price) = 1.10 not 1.00 -

            If you want to have the standard cost avaialble in the the inventory screens as a default costing entry of transfters and issues, receipts etc. I recommend that oyu create and maintain a Price List (really a cost list - named Standard Cost).
            This is an easy procedure, to export a list of your inventory items with the standard cost and import them to a price list using the import tool.

            Another way would be to create a formatted search on the cost field in those forms where required which would automatically pull the standard cost from the item.

            This can get complicated if you have a different standard cost in each warehouse (if you have multiple warehouses).

            Remember that the costs in a BOM are only good for a moment in time; when it's created. Even if these "projected costs" are standard cost, the BOM needs to be recalculated each time it's used becuase standard costs may have changed. That's why the system will use the item cost (in your case standard) when the item is produced. If you want the BOM's to refelect a more current cost you must recalculate them with the Production menu Item "Update Parent Item Prices Globally". In your scenario, I would recommend that creating a Price list which relfects your standard costs will make this easier. You will also be able to create BOM's more easily using styandard cost for your projections.

            I hope this information was helpful.


            Carl Lewis.