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Item Cost of made items updated by Moving Average

Former Member
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Hi All,

I am having issues because we make all of the items we sell and use the moving average valuation method.  There are several steps and materials used to create our "top level" sales item.  When closing the lower level production orders the value of the materials and labor used is carried into the sub-assemblies and then eventually into the "top level" sales item.  However, the materials and labor used to create the "top level" sales items can vary. The value that goes into the inventory G/L account is correct but when the sales item is closed from the sales order to the delivery, the value that is taken out of inventory and transferred to COGS is the set item cost for the sales item.  This item cost does NOT seem to be updating when the "top level" production orders are closed at different values. The items on our sales order are put into inventory by production orders rather than purchase orders.  Is the only way to get the item cost to update through purchase orders and goods receipts?  I need it to update every time a unit is made based on the value from the production order.

Thanks,

Savanna

Accepted Solutions (0)

Answers (3)

Answers (3)

Former Member
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Thanks for your help.  I've figured it out.  My top level item's issue method was set to manual.  When I changed it to backflush and tested it it worked properly.

Former Member
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Hi,

If you are talking about back to back order then it's not possible for production order.

Production cost will get updated as per your setting for raw material price updated by what price method you have choose for.

You have choose moving average then it will average it out cost every time you produced.

frank_wang6
Active Contributor
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Production does change the value of your finish good, but since your are using AVG, so existing qty and value will have effect too.

Unless you can make sure the sequence is always in

Produce -> Sales ->Produce->Sales.

In your case, i think FIFO will be better for you.

Frank

Former Member
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The process used is Sales order is created, from there production orders are created, then items are produced (production orders are closed), then items are delivered (sales order closed) and finally invoiced.  However, as far as I can tell no matter what the actual component cost of the item is the item cost does not change unless there is a goods receipt against it or I do an Inventory Revaluation.

frank_wang6
Active Contributor
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Ok, first I am sure cost will be changed by production order.

Another place you might want to check is if you manager item cost by warehouse?

Former Member
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I think part of the problem is that the top level production order is being created by the Configurator addon and not based on a set BOM.  Could this be my issue?