FIFO Methodology

Barun

Hi All,
My client has an requirement-- They are following FIFO basis of costing. Please follow the following example:

Item A -- 20 units in stock (comprises of 12 units @Rs.10 + 8units @Rs.12) on 1.10.2009

Now the client issued 20 units in the following way - (POSTED IN NAV thru Item Journal - Neg.Adjustment)

Issue Date Qty. issued

4.10.2009 14
6.10.2009 6

Now as per FIFO method of costing, the cost of issue of 14 units (on 14.10.2009) will be 12 units @Rs.10 + 2 units @ Rs.12 whereas balance 6 units will be valued at cost @ Rs.12.

Now what happens- on 5.10.2009 there is a purchase of the above item (another say 4 units) @ Rs.9 which our client forgets to post in NAV. On 7.10.2009, Client posted the purchase giving posting date as 5.10.2009 (i.e. back dated entry).
Now if the client runs run Adjust Cost Item Entries batch Job, will he get the correct cost valuation ?

kapil4dynamics

<Edit> Read (Red) Wrong

kriki

[Topic moved from 'NAV 2009' forum to 'NAV/Navision' forum]

Kowa

You had 20 in Stock, and posted a decrease of 20 (14 + 6).

NAV applies open Item Ledger Entries as soon as possible. The decreases from 04.10 and 06.10 are applied at the moment of posting, because there is enough inventory to apply them to. The purchase from 05.10 posted on the 07.10 has no effect on the valuation because all item ledger entries are closed when this is posted, unless you reapply the decrease to it manually. Item applications are not reopened and reapplied when backdated entries are posted. In some cases, these entries will have a valuation date which differs from the posting date, I posted some scenarios for this here.

Even if the purchase had been posted on time, the application and valuation would (in this case) have been the same, because then there would have been 2 open positive entries on the 06.10, from which the older one (the old stock,not the current purchase) would have been chosen due to the FIFO setting.