Average Cost vs Unit Cost

chaswin

There has been recent discussion regarding the way in which the Unit Cost and Average Cost fields are used, in particular why they might not be equal to each other for an average cost item. One posting went so far as to suggest that there are two fields because they may be different and that the average cost is just a memo field. This has not been my experience during testing of average cost procedures so I decided to conduct a simple test to see which field is used in different situations.

I did the test by creating an average cost item in Cronus and posting a purchase invoice for 100 at 100.00. I then took away the following validation on the unit cost field and changed the Unit Cost on the Item card from 100 to 75.00:

{
IF ("Costing Method" = "Costing Method"::Standard) THEN
VALIDATE("Standard Cost","Unit Cost")
ELSE
TestNoEntriesExist(FIELDCAPTION("Unit Cost"));
}

After changing the field I restored the original code. At this stage the Average Cost was 100.00, whilst the Unit Cost was 75.00.

I then processed a Negative stock adjustment. As expected, the Unit Amount and Unit Cost were copied from the Unit Cost on the item card into the journal line (75.00). I posted the journal and checked the Item and Value ledger entries. Both entries were at the Average Cost (100.00) and not the cost of 75.00 shown on the face of the journal. I repeated the experiment with a sales invoice. Once again the Average cost field was used, not the Unit Cost. Finally I ran a Physical Inventory adjustment. I reduced the stock by ten units and the system used the unit cost of 75.00 to value the adjustment. However once again the Average of 100.00 was used for the actual posting.

I then ran the ACIE and Post Cost to GL to see if any changes took place, but the only affect was to change the Unit cost to 100.00 so that it agreed with the average cost.

This rather simplistic test would seem to indicate that the system expects these two fields to be the same, but in fact keeps the Unit Cost as the memo field. (The only time they are not the same is when the SOH is zero, when the Average cost is also zero and the Unit cost is equal to the last average).

I am a consultant rather than a developer so I am not familiar with the code. However it would seem that any difference between these fields (other than when SOH is zero) is a cause for concern. Incidentally, if you run version 3.6 without the hot fixes then you will find a difference between the two fields is not uncommon.

Could a seasoned Navision developer please comment on my findings?