Negative Adjustment including Item Charge

airam

hi, I would like to ask for guidance please.

I have created a new item to test the unit cost calculation, I've created and received 2 POs for the item. I've created another PO with a Charge Item and assigned to both previously created POs. my first question is, can the 'Expected Cost' of the Charge Item be included in the Average Cost Calculation of the Item? Cause it's only being taken into consideration once the PO is invoiced. Then I wanted to pass a negative adjustment but changed the Unit Cost to the actual cost of the item excluding the Charge Item allocation, but once I've ran the Adjust Cost Item Entries, NAV is adding another negative adjustment entry with a value which I'm not sure how it's being calculated. Can you please indicate which values is this being calculated on?

thanks in advance!

Kishorm

1st Question...

No, Item Charges do not post expected costs. This is possible with development but to do it properly it's not easy

2nd Question...

Total Cost = 12197.50 (47.50 + 21.26 + 8100.00 + 4028.74)
Total number of Items = 1010
Avg Unit Cost = 12.0767 (12197.50 / 1010)
Cost for -6 posted = 28.50
Negative Adj Cost for 6 should be = 72.46 (12.0767 * 6)
Auto Adjust Cost for -ve 6 = 43.96 (72.46 - 28.50)

airam

thanks for your quick reply.

re 2. much clearer now! but in reality for example if the charge item was freight this should be still part of the cost of the item, cause the seller will only refund the damaged goods cost and not the freight charge as well. so in that case how should it be treated please?

Kishorm

On your credit you set the unit cost you are crediting in the "Direct Unit Cost" field. However, the system will post the adjustments as above because your costing method is set to average. If you don't want the system to post cost adjustments for the item charge then you need to use an alternative costing method (maybe FIFO for example)

airam

thanks once again Kishorm, however I've tried with FIFO and Standard but still, the whole unit cost is taken into consideration for the Decrease, including the Charge Item portion as well.

any other ideas of how to go around this please? thanks!

Kishorm

I thought that's what you wanted? Earlier on you said...

...for example if the charge item was freight this should be still part of the cost of the item

...if you don't the freight to be included in the item cost then don't post as an item charge - just post as a G/L Account.

airam

yep you're right apologies for the confusion, what I meant is that in general the Item Charge should be part of the Unit Cost, but when I post a decrease I want that only the actual cost of the item is deducted excluding the item charge portion, cause that won't be refunded by the supplier. I hope it's clearer now and thanks for your input!

Kishorm

The cost of the item is the cost of the item - it's irrelevant whether or not you get refunded for all of it or not if/when you return an item to a supplier.

Using item charges allows you to add additional costs, such as freight, to items. When you sell the item (negative movements) the cost should reflect the total cost - including these additional items charges.