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Balagopal R

Costing Method - FIFO

Inventory Valuation - Automatic

I have a product A in my inventory.

Doing a purchase of 1 qty with the cost of $10. As soon as I received/validated the Receipt, the Cost is updated as $10, which is fine. I have created the Vendor bill as well and all the entries seem correct.

Now I need to create a Landed cost against this shipment. So I created a Landed cost (Freight Charges - Service Type - marked as Landed cost product in the master as well) and created a vendor bill with the price of $5 and Validated. Then I created the Landed cost from that particular bill and mapped the shipment also in that Landed cost record and Validated.

But the cost of the Product is still $10. Meanwhile, if we are checking the Valuation (from the product master - On Hand QTY) the valuation is updated as $15.

Why it is not reflecting in the Product Cost? Am I missing something or the default flow is that?

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Ray Carnes (ray)
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Under FIFO, the product cost is "the cost of the LAST product delivered" so you won't see it update until then.  Some Users hide this field since a better place to review costs (there can be many at a time) is the Inventory Valuation report.

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Balagopal R
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Thanks for the reply. How can we solve this?

1. Suppose if I want to know the Unit price of a Product after updating the Landed cost, how can I know that?

2. While I am doing the Sales also, the product cost is showing without adding the Landed Cost. After the first sales only, the actual cost is getting updated. That could make mistakes in the COGS account?

Ray Carnes (ray)

1. Use the Inventory Valuation. 2. COGS is correct because it is calculated based on the Inventory Valuation information, not the product cost. Remember you can deliver three products all with different costs, so using the product cost won't work for COGS.

Ramzi Khouri

Thanks Ray for clarifying. I'm in this boat now answering my client.
Question:
Has anyone tried to bring in the stock valuation to the product for display next to the cost? Does this make sense or does it defy the FIFO principle al together?
Does it make sense to calculate sales margins on stock valuation? has anyone tried it?

I will be avoiding customization but I was just wondering what the repercussions might be if client is interested in this route.

jbarnhart@minespress.com

Thank you, that was the key. The "hint" on the "cost" entry on the product says that it is the "value of the NEXT unit that will leave the stock". That isn't true.

Ray Carnes (ray)

"the LAST product delivered" is relevant for v13. "the NEXT unit that will leave the stock" is relevant for v14 and higher. We made this change due to wanting the cost information to be relevant to what will happen NOW or IN THE FUTURE instead of THE PAST.

Abdoulaye Daba Coulibaly

Hi, I have a partner who asks for the same thing, his valuation is done in FIFO and when he buys an item and wants to resell it, the cost of the item is not updated, it takes the last cost in the file of article and only with the following order it recovers the cost of the purchase.