UNIT COST (LCY) Field on Sales Invoice

Beatrice

Hi,

Our customers are complaining about the way system calculates the Unit Cost on a Sales Invoice in Navision.

We have noticed that when entering a sales invoice for an item, system takes the value in the Unit Cost field on the Item Card, when the Costing Method is Average.

Even though we modify the value in the Unit Cost (LCY) field, system readjusts the Cost of Sales on the Posted Sales Invoice.

This is an urgent issue and users are complaining because it is causing major difference in their margin calculation.

It happened for some posted sales invoices that the Cost of Sales exceeds the Selling Price.

Please advise.

Thanks and Regards,
Beatrice.

AdamRoue

Hi

Even though the cost is higher than the selling price this might not mean anything is wrong in teh system.

So how are you altering the unit cost? You should not be able to on the item card, as once it starts calcualting that is it. You can on the sales line but why? You are average costed, let the system work properly. There are known bugs in average costing in different versions, so it may depend upon which version you are on, I would suggest contacting your reseller. However the way the system calculates the cost is not an issue in my opinion generally. Take a simple example - book one in at $10, book another in at $15, run through the different stages of sales orders, invoicing the receipts and running the adjust cost entries and you will see the cost ending up at $15. Yes your margin can change, but that is average costing for you, especiailly the periodic average costing used in NAV.

Beatrice

Even though the cost is higher than the selling price this might not mean anything is wrong in teh system.

So how are you altering the unit cost? You should not be able to on the item card, as once it starts calcualting that is it. You can on the sales line but why? You are average costed, let the system work properly. There are known bugs in average costing in different versions, so it may depend upon which version you are on, I would suggest contacting your reseller. However the way the system calculates the cost is not an issue in my opinion generally. Take a simple example - book one in at $10, book another in at $15, run through the different stages of sales orders, invoicing the receipts and running the adjust cost entries and you will see the cost ending up at $15. Yes your margin can change, but that is average costing for you, especiailly the periodic average costing used in NAV.

Hi,

Thanks for the reply.

Customer is using NAV 4.0 SP1. Is anyone aware of any bug in average cost calculation on NAV 4.0 SP1?

User is changing the value in the Unit Cost (LCY) field on the sales line before posting. But even after posting the system readjusts the cost to the Average Cost.

Thanks and Regards,
Beatrice.

AdamRoue

Hi

The fact that they are altering the unit cost on the sales line is your first issue. Why are they doing this? You are in an average costed environment, so the system will post the average cost, your "entered" cost is irrelevant as it is not the average cost of the item. The average cost is an constantly moving animal, and depending upon when you look at this and the stage of your purchase invoice processing this will alter.

you need to give an example of average costing not working for you, what you are describing is not an issue, the system will not use your cost, it will use the average cost, otherwise you will really screw up your system, as you have the item held at one average cost and being removed from inventory at your cost - try and imagine this. You book an item in at $10, you book another in at $20, you have two in stock totalling $30 with an average cost of $30. You enter $10 on the sales invoice and this cost is actually used. This leaves you with $20 in the inventory asset account and a stock valuation of $15, and this would never alter giving your accountants and auditors a massive headache. If you want this, then the item should be FIFO.

Miklos_Hollender

We had a customer who wanted to update unit cost manually on the invoices. Here's what we done. In Item No. - OnValidate of the Sales Line we saved the correct Unit Cost into a new field, Financial Unit Cost. Then we let the user play around with the Unit Cost. Then in CU80 when it posts the Item Journal, we reverted back i.e. assigned the Financial Unit Cost - the original cost - to the Unit Cost on the Item Journal.

The result is that all Item Ledger Entries, Value Entries, COGS and Inventory Value in the G/L is on the correct, system-calculated cost. However the posted invoice, the F9 on the posted invoice, and the cost and profit in the Customer Ledger is what the user set. These fields are not used anywhere, have no place in costing, not part of the COGS audit trail because that audit trail is that Purchase Invoice -> Purchase Item Ledger Entry -> Sales Item Ledger Entry by application if FIFO or by average if average -> Sales Value Entry -> G/L COGS. The cost fields in the posted sales invoice and the customer ledger are just purely for analytical purposes, have NO accouting consequences. Therefore it is safe to do so.