Average Costing

mlenav · 2005-05-07

Greetings,

My company has implemented Navision as our business solution. We are attempting to use average costing but appear to be handing this incorrectly. It appears that the system averages costs over all transactions even ones that have been posted. Dispite running the Adjust Cost Entries job daily (at times multiple times during a single day, I did this trying to figure out what the system was doing) it still changes costs for orders that were posted and have had the costs adjusted already. In addition we have set up the system to automatically adjust cost when a transaction is posted. This automatic adjust cost does not appear to produce the desired result which is to simply apply the current average cost to the transaction and freeze the cost. I have not had success getting a resolution from our MBS provider which employs about 15 people. We are using version 3.7b. I would really appreciate any insight into how costing works on this system.

Best Regards!!!

KeesMeuzelaar · 2006-07-06

This is already an old issue but i am curious about your solution.

I have seen in navision 4.0 sp0 that it did not change posted entries, and sp1 it does change the entries. You are working with an older version and it does change the entries. So it seems to be that navision is working a lot on this issue.

I am also interested how navision 4.0 sp2 handles this problem.

I have a customer on navision 4.0 sp0, but i am afraid to get this problems if i upgrade to navision 4.0 sp1 or 2.

Did you get any experience since then.

Greetings Kees Meuzelaar

johnson_alonso · 2006-07-06

You must understand that :
"The average cost is calculated as the sum of the values of the Cost Amount (Actual) field divided by the sum of the invoiced quantity for those value entries with a valuation date that is equal to or earlier than the inventory decrease" and or "The average costing method calculates a weighted average of the remaining inventory on the valuation date of the inventory decrease"

Based on the above definition, you must avoid to use serial no and lot no. it will make the adjusting more slower and take a long time. By using jobscheduler, you can run adjust cost item entries in the time that none of users use the database, don't use automatic cost adjustment in the inventory set up.

Rgds,
Johnson

Sea-Navision-Community-subscribe@yahoogroups.com

http://sea-navision-community.blogspot.com

Alex_Chow · 2006-07-06

mlenav wrote:

Greetings,

My company has implemented Navision as our business solution. We are attempting to use average costing but appear to be handing this incorrectly. It appears that the system averages costs over all transactions even ones that have been posted. Dispite running the Adjust Cost Entries job daily (at times multiple times during a single day, I did this trying to figure out what the system was doing) it still changes costs for orders that were posted and have had the costs adjusted already. In addition we have set up the system to automatically adjust cost when a transaction is posted. This automatic adjust cost does not appear to produce the desired result which is to simply apply the current average cost to the transaction and freeze the cost. I have not had success getting a resolution from our MBS provider which employs about 15 people. We are using version 3.7b. I would really appreciate any insight into how costing works on this system.

Best Regards!!!

The average costing is fine in Navision, abait a little quarky.

Can you post a example on why you're not getting the desired results?

mlenav · 2006-08-10

I posed my initial post incorrectly. The problem we are seeing is value entries being posted on what we think should be closed entries.
For example:
100 pieces of item X are received and invoiced on 1/1/06 with a cost of $100.
On 1/2/06 100 pieces of item X are shipped and invoiced with a cost of $100.
On 3/2/06 100 pieces of item X are received and invoiced with a cost of $200.
On 3/2/06 the Adjust Cost Batch is run.
The batch posts cost adjustments to the 1/2/06 invoice, increasing the COGS to $150 and to the 3/2/06 entry reducing the cost to $150. The net result is a profit hit of $50 on 3/2/06 and a reduction of inventory value. We realize that we pick this back up when we invoice the remaining inventory but obviously this is not acceptable.

We have not been successful in finding a resolution. Any insight would be greatly appreciated.

Best Regards!!!

frede · 2006-08-10

We are also currently working with version 3.70B and are focusing on average costing.

Therefore it was interesting to read the above mentioned problems.

I have tested it in our 3.70 B - and the problem is as stated.

Now I've tested it on 4.00 SP2 and everything is fixed concerning the Average-posting and adjusting.

Navision keeps the cost for sale at 100/each even though a later purchase has a higher price.

So the answer is (sorry to say) do an upgrade to 4.00 SP2. :shock:

frede · 2006-08-10

You should beware of the dates!!

I didn't change the posting date for the second purchase - so it had the same date as the first purchase - and then actually Navision calculates the correct average cost for the sale even though it was posted before the second purchase - but the sale was on a later date (the day after).

I've now tried it with correct dates

1. purchase 100 at date 1
2. sell 100 at date 2
3. purchase 100 at date 3 with higher cost

And Navision does not change the cost for the sale - nor does it change anything else - so my Navision 3.70 B is working correctly.

Sorry for saying anything else... :^o

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