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In V 10 Community, I have set up all product categories to be Avg Price, and have enabled real time inventory valuation.

The average cost is being updated on purchased products just fine (well, as long as you don't process anything out of sequence, i.e. you can't receive the product before the new price is set).

However, even though the component(s) which have been purchased have updated the cost, the product which uses that component in a BOM is not using the new component cost.  The produced parts continue to use the previously manually set cost.  

Is there some hidden setting that must be set to have products produced through manufacturing to inherit the higher cost of their BOM components?

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