Converting Average->Std. Cost

megawavez

Hi,

We have parts that are average cost but would like to convert them to standard cost (there is already activity against these parts). Is there anyway to do this? Can the inventory be reduced to 0, then the costing type changed programatically, or will we be damaging our database? Thanks for any input.

Mega

ara3n

Hello Mega
There are a couple of threads on this subject. If you search the forum, you'll find them, there a couple of additional steps that you need to do in addition of what you described. Let us know if you have additional questions after you read those topics.

megawavez

ara3n wrote:

Hello Mega
There are a couple of threads on this subject. If you search the forum, you'll find them, there a couple of additional steps that you need to do in addition of what you described. Let us know if you have additional questions after you read those topics.

Found 'em - thanks for the heads up!

trin

Hi,

I have the same question on converting average cost to standard cost and could not find the threads refered on the previous message. Can someone help?

Thanks

megawavez

trin wrote:

Hi,

I have the same question on converting average cost to standard cost and could not find the threads refered on the previous message. Can someone help?

Thanks

Found one link:
http://www.mibuso.com/forum/viewtopic.p ... ing+method

Try searching on "Costing Method"

It looks like you have to:
1) Reduce the inventory quantity to 0
2) Make sure "Quantity Received" = "Quantity Invoiced" for all POs
3) Run a Cost Update report

Then run some code to change the method programatically.

GL.

Kowa

megawavez wrote:

It looks like you have to:
1) Reduce the inventory quantity to 0
2) Make sure "Quantity Received" = "Quantity Invoiced" for all POs
3) Run a Cost Update report

4) Create new items (copy the items using new nos.) to prevent any influence between old and new costing method.
5) Post positive adjustments with the old quantity and the correct unit cost.

megawavez

Kowa wrote:

megawavez wrote:

It looks like you have to:
1) Reduce the inventory quantity to 0
2) Make sure "Quantity Received" = "Quantity Invoiced" for all POs
3) Run a Cost Update report

4) Create new items (copy the items using new nos.) to prevent any influence between old and new costing method.
5) Post positive adjustments with the old quantity and the correct unit cost.

Probably the option we'll have to use, but we're going to have to go through and correct all the references to existing part #'s (BOMs, and purchase orders).

David_Singleton

megawavez wrote:

...

Probably the option we'll have to use, but we're going to have to go through and correct all the references to existing part #'s (BOMs, and purchase orders).

Understand that this is a VERY common request. companies change companies grow, and business needs change. I have changed costing methods a lot for companies.

It s totally wrong to say "This is the best costing method" and use it for all clients, but unfortunately it happens, and after using Navision for a year or two clients realize that they should have thought it through more, ... so I have changed costing many times.

I must say I have NEVER created new items, and I can not believe that a client would accept the amount of disruption that this would cause to their business. In most cases, I have reduced inventory to zero, and repopulated quantities, but in some cases clients can not even accpet this level of business interruption, so I have sometimes changed the costing method on the fly, and this is also possible, though of course more complex.

basically you need to weight the cost of interruption to your business, vs the cost of having a complete and proper analysis of your business model, and they way you work with Navision.

Kowa

David Singleton wrote:

I must say I have NEVER created new items, and I can not believe that a client would accept the amount of disruption that this would cause to their business.

There was a white paper from MS published earlier this year about the changes in inventory costing between 3.60, 3.70 and 4.0 where this was recommended, because some fields are used for different purposes depending on the costing method.

This is the link for the german version ( I can't find the english version )
https://mbs.microsoft.com/partnersource ... bis_40.htm

David_Singleton

Kowa wrote:

...
There was a white paper from MS published earlier this year about the changes in inventory costing between 3.60, 3.70 and 4.0 where this was recommended, because some fields are used for different purposes depending on the costing method.
...

:oops: It was MS suggesting this :shock: I wonder if it was someone that has experience on site with customers :-#

The whole problem is that Navision's costing system is FIFO, and works fine with any similar system like LIFO etc. It can be made to work fine with specific and LOTs, Standard costing is not correct, but its not too far off, and in manufacturing its generally acceptable, but its average costing is a mess.

Far better would be if they left the current costing mechanism to handle the core specific costing types , and then added two new costing modules Standard and Average that were completely separate, and only activated if the client actually used them (i.,e. separate tables). I have done this for a few clients for Standard costing, and for sure it was less work than butchering the current system. Standard costing I did with tables that track standard cost by date, so the accounting was extremely simple. Average could be done by a series of "Cost buckets" that are connected to Item Ledger, but totally separate from Value entries. It would be less work, and also performance wise you would not be doing all these unnecessary calculations that you may not need.

megawavez

David, could you elaborate on some of the issues with Standard Costing?

Thanks.

David_Singleton

megawavez wrote:

David, could you elaborate on some of the issues with Standard Costing?

Thanks.

There are no "issues" as such with standard cost. But in reality it just does not work like a standard manufacturing company would work. The issues comes at the end of a period when you have analyzed costs, and decide to change the standard cost. Of course in Navision these are stored at the Item ledger level (via the Value Entry), but Standard cost is normally a function of a date range. Its not a huge mod ot add a new table that stores Standard Costs by Item and By date, and then there is no real need to the values stored in the Value Entry table. Yes the current system works, but it could be a lot cleaner, and more importantly much faster.

megawavez

David Singleton wrote:

megawavez wrote:

David, could you elaborate on some of the issues with Standard Costing?

Thanks.

There are no "issues" as such with standard cost. But in reality it just does not work like a standard manufacturing company would work. The issues comes at the end of a period when you have analyzed costs, and decide to change the standard cost. Of course in Navision these are stored at the Item ledger level (via the Value Entry), but Standard cost is normally a function of a date range. Its not a huge mod ot add a new table that stores Standard Costs by Item and By date, and then there is no real need to the values stored in the Value Entry table. Yes the current system works, but it could be a lot cleaner, and more importantly much faster.

Gotcha. Navision is a little odd how it handles things sometimes.

megawavez

David Singleton wrote:

megawavez wrote:

...

Probably the option we'll have to use, but we're going to have to go through and correct all the references to existing part #'s (BOMs, and purchase orders).

Understand that this is a VERY common request. companies change companies grow, and business needs change. I have changed costing methods a lot for companies.

It s totally wrong to say "This is the best costing method" and use it for all clients, but unfortunately it happens, and after using Navision for a year or two clients realize that they should have thought it through more, ... so I have changed costing many times.

I must say I have NEVER created new items, and I can not believe that a client would accept the amount of disruption that this would cause to their business. In most cases, I have reduced inventory to zero, and repopulated quantities, but in some cases clients can not even accpet this level of business interruption, so I have sometimes changed the costing method on the fly, and this is also possible, though of course more complex.

basically you need to weight the cost of interruption to your business, vs the cost of having a complete and proper analysis of your business model, and they way you work with Navision.

Dave,

Have you ever changed the costing method for a company on the fly where they also have purchase orders that have been received but not invoiced? What's involved with this kind of change?

David_Singleton

megawavez wrote:

Dave,

Have you ever changed the costing method for a company on the fly where they also have purchase orders that have been received but not invoiced? What's involved with this kind of change?

Hi,

sorry for not replying, I lost some notifications. Anyway.

Yes I have done this. In the end it comes down to a cost comparison to the cost of the coding work to do this, vs the cost to the business of having to manually close out and manage a lot of POs, and then have a mess in inventory to handle.

What you do is add new fields that are used to track the current cost, and then make value entries to bring everything to the new correct cost, and as your true initial costs come in, you make adjustments to this new field that keep things in track. You would really want to turn of Expected cots, and you must turn off Auto Cost posting, until all the costs are adjusted, but its quite possible.

Definitely in more than 50% of cases this is better than wiping out inventory and starting clean.

megawavez

Thanks for the response - well, sounds complicated no matter what....