Item Value entries when using FIFO Costing Method

knm

I'm currently testing how cost of sold items are being calculated when using FIFO Costing method, and there are things that I do not understand that I would like to get advice on.

To explain myself properly, please I'll setup a sample scenario as follows:

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Item Status of "Item A" as of 01/30

Rcpt Num Date QTY Unit Cost
000001 01/01 10 $10.00
000002 01/10 10 $20.00
000003 01/20 10 $30.00

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On 01/30, I need to post Sales Shipment/Invoice with QTY = 1 of "Item A", considering the following different situations.
1) Regular Sales Entry
-> Item Value Entry will indicate that Sold Item Cost = $10.00

2) Sales Entry after reserving the item entry where "Rcpt Num" = 000002
-> Item Value Entry will indicate that Sold Item Cost = $20.00

3) Sales Entry after applying item entry where "Rcpt Num" = 000002
-> Item Value Entry will indicate that Sold Item Cost = $20.00

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Item Status of "Item A" as of 01/30

Rcpt Num Lot Num Date QTY Unit Cost
000001 LOT1 01/01 10 $10.00
000002 LOT2 01/10 10 $20.00
000003 LOT3 01/20 10 $30.00

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Same as before, Sales Shipment/Invoice with QTY = 1 of "Item A", considering the following different situations.
4) Sales Entry after assigning item tracking entry where "Lot Number" = LOT2
-> Item Value Entry will indicate that Sold Item Cost = $10.00

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Rcpt Num Lot Num Date QTY Unit Cost
000001 LOT1 01/01 10 $10.00
000002 LOT2 01/10 10 $20.00
000003 LOT3 01/20 10 $30.00

Then, create a Special Order where the following Purchase is linked

Rcpt Num Lot Num Date QTY Unit Cost
000004 LOT4 01/30 1 $40.00

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5) Special Order (with Lot Number)
-> Item Value Entry will indicate that Sold Item Cost = $10.00



Now, the thing that I don't understand is cases 4) & 5).
I the Lot Number is specified on the Sales Shipment/Invoice, shouldn't the Sold Item's Unit Cost follow the linked Receipt, which is $20.00?

Also, if Special Order is posted, then shouldn't it be the case that the Sold Item's Unit Cost be $40.00, instead of $10.00?
Or does NAV always stick with the Rule FIFO, if there are no Reservation or Item Application indicated on the Sales entry?

Thank you in advance!

bbrown

Have you run Adjust Cost?

knm

Hi bbrown,

I'm sorry for not mentioning, but I've the NAV2009SP1 setup as below.

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Inventory Setup
Automatic Cost Posting: Checked
Expected Cost Posting to G/L: Checked
Automatic Cost Adjustment: Always

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So as you can see above, the Cost Adjustment is always processed, when I post inbound/outbound transactions in NAV.

Thanks!

Kowa

Item Reservation or Special Order No. have no influence on the item application. The Lot No., if used, is relevant, together with all the other parameters in the code snippet below.

      IF FirstApplication THEN BEGIN
        FirstApplication := FALSE;
        ItemLedgEntry2.SETCURRENTKEY(
          "Item No.",Open,"Variant Code",Positive,"Location Code","Posting Date");
        ItemLedgEntry2.SETRANGE("Item No.",ItemLedgEntry."Item No.");
        ItemLedgEntry2.SETRANGE(Open,TRUE);
        ItemLedgEntry2.SETRANGE("Variant Code",ItemLedgEntry."Variant Code");
        ItemLedgEntry2.SETRANGE(Positive,NOT ItemLedgEntry.Positive);
        ItemLedgEntry2.SETRANGE("Location Code",ItemLedgEntry."Location Code");
        IF ItemLedgEntry."Job Purchase" = TRUE THEN BEGIN
          ItemLedgEntry2.SETRANGE("Job No.",ItemLedgEntry."Job No.");
          ItemLedgEntry2.SETRANGE("Job Task No.",ItemLedgEntry."Job Task No.");
        END;
        IF ItemTrackingCode."SN Specific Tracking" THEN
          ItemLedgEntry2.SETRANGE("Serial No.",ItemLedgEntry."Serial No.");
        IF ItemTrackingCode."Lot Specific Tracking" THEN
          ItemLedgEntry2.SETRANGE("Lot No.",ItemLedgEntry."Lot No.");