Freight, Item Charges and Expected Cost Posting

DarkSide

I'm working with Nav5.0 but this may apply to all versions that support expected cost posting and item charges.

A company bases their selling price on a markup from acquisition cost. Part of this cost is freight. In the past they have had trouble with using an overhead rate for freight because is varies widely by product. So as their product mix changes they have large variances between freight applied via overhead and actual freight charges.

So, item charges to the rescue right? Wrong! ](*,)

When items are received only the expected cost of the inventory is posted, not the item charge for the freight. So, in a situation where much of the inventory is turned each week, users are seeing a unit cost that does not include freight. They are then making bad selling decisions on that cost.

To complicate matters, the product cost for an item varies significantly from purchase to purchase so the idea of using a standard cost just doesn't work either...it's partly why the feight costs don't work as an overhead rate.

Has anyone out there had to deal with something like this? I've thought about looking at the value entries to see if a freight item charge has been posted - if not then add a freight estimate. But that gets tricky because some items are shipped to them delievered (includes freight) and some do not.

Of course the best way would be to have the item charge's expected cost to post when received but I've been told this will be nasty.

Thanks in advance.

themave

just a rough thought, what if you added two fields to the purchase line table,

expected item cost
expected freight cost

then code it to add these two cost together and place it in the unit cost field on the purchase line.

this way the expected cost routine would not have to be changed, and the freight would be posted as part of it.

on first read of your problem, this would be my starting point.

washbowl

DarkSide wrote:

I'm working with Nav5.0 but this may apply to all versions that support expected cost posting and item charges.

A company bases their selling price on a markup from acquisition cost. Part of this cost is freight. In the past they have had trouble with using an overhead rate for freight because is varies widely by product. So as their product mix changes they have large variances between freight applied via overhead and actual freight charges.

So, item charges to the rescue right? Wrong! ](*,)

When items are received only the expected cost of the inventory is posted, not the item charge for the freight. So, in a situation where much of the inventory is turned each week, users are seeing a unit cost that does not include freight. They are then making bad selling decisions on that cost.

To complicate matters, the product cost for an item varies significantly from purchase to purchase so the idea of using a standard cost just doesn't work either...it's partly why the feight costs don't work as an overhead rate.

Has anyone out there had to deal with something like this? I've thought about looking at the value entries to see if a freight item charge has been posted - if not then add a freight estimate. But that gets tricky because some items are shipped to them delievered (includes freight) and some do not.

Of course the best way would be to have the item charge's expected cost to post when received but I've been told this will be nasty.

Thanks in advance.

I think this becomes a trick in reality not the system. If they are using average cost, the unit cost should reflect purchase + freight in a long term view.

DarkSide

I think the only good solution is to have value entries and GL entries post as expected costs if you post a receipt for an item charge. This way I'll get my total item cost and my inventory/accounts payable will be properly stated. I've found where it needs to be done in CU90, now it's just a matter of code.

When invoiced these expected costs will reverse and the actual costs will post.

When (or if) I get time to code this I'll try to post it here for others to benefit.

dshoults

I have a client looking for the same thing and I was wondering if you ever wrote the code to handle it.

Thank you,

DarkSide

I have it started but it's far from complete.

Someone has told me about a workaround but it's kind of a hack and processing intensive. Basically it involves looking at all open item ledger entries for an item to see if there are any PO receipts that are not invoiced (i.e. a "received" item charge). Then add the cost of this into your items cost. It really only handles half the issue and I just plain don't like it.

Anyway, if I ever do find the time to finish this I will post the code. Hopefully you will do the same.

Thanks.

ara3n

i've done the code for a client. It's in 5.0.

DarkSide

ara3n! Thanks for weighing in, I'm honored. I highly respect you for the PDF post you made (well, ok, other posts too).

If it's in 5.0 what do I have to do to make this work? If I have an item charge assigned to an item, and I post the receipt of the item and item charge, only the item's cost is posted. The item charge does not hit value entries until it's invoiced.

I have expected cost posting, automatic cost posting, etc. turned on. I've also tried different combinations of them on and off. I've tried running the post inventory cost to gl as well.

Any help would be appreciated.

DarkSide

D'Oh!

I may have misunderstood your posting. I replied thinking you were saying the functionality is in 5.0. Now I'm thinking you meant you did the mod in 5.0.

So what do I have to trade to get you to share?

mcoAggie

I am about to write this same code into Nav5.0. A little help would be great. 8-[

Steve.Desmedt

Dear All,

Has somebody made an overview of code that has to be modified and who wants to share this ?
Because i have exactly the same problem as described above.

Kind Regards

kbpatel

Hi All

Digging up an old query, but can anybody help and share code developed for this functionality, or point me in the right direction.

Thanking all in advance

lally

ara3n wrote:

i've done the code for a client. It's in 5.0.

I would like to know as well. Could you share the solution ?

ara3n

i had missed this thread. I will post a solution

jdelfraisse

ara3n wrote:

i had missed this thread. I will post a solution

Rashed,

Did you have a chance to post a solution?

Thanks!