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While Modifying Unitcost of an Item, During posting the PO.

sivaguru_ksrsivaguru_ksr Member Posts: 100
edited 2006-08-23 in NAV/Navision Classic Client
Hello,

By default, Navision is not allowing to modify the Unit Cost of an Item when there is an outstanding purchase order or any ledger entries exists.
But our client wants Unit Cost,Standard cost,Last Direct cost of an Item to be modified (irrespective of Costing Method) when posting the PO.smilarly Unit Price Of an Item to be modified when posting an SO.

Will there be any side effects in doing this customization.Please help me.

Comments

  • themavethemave Member Posts: 1,058
    Yes, depending on what costing method is being used, Navision uses those cost to post g/l entries, if you are changing them on the fly your costing may not be correct.
  • Miklos_HollenderMiklos_Hollender Member Posts: 1,598
    Sorry, but this contradicts the most basic principles of accounting. A company cannot have a cost figure that he cannot prove by documents (vendor invoices), this is an important principle.

    Hopefully your client does not want to use these cost fields for accounting, only for some calculations. Then, just create a new decimal field like "Internal Recognized Cost" or whatever, and update this on posting. It's a lot cleaner. And then make reports for it of course.
  • sivaguru_ksrsivaguru_ksr Member Posts: 100
    Thanks for Reply,

    I am technical guy,I don't know how it effects the accounting principles.our client says Unit Cost /Unit price is not standard one.it keeps on varying based on Vendor /Customer.(example ,Same item can be Purchased from different vendors at different cost)

    If these Cost keep on changing,then how Accounting principle(navision) uses old Unit cost/Unit price for G/L entries.will it be a correct,if we use Same old Unit cost /Unit Price which is on Item card(entered during item creation time)
  • Miklos_HollenderMiklos_Hollender Member Posts: 1,598
    Yes of course unit costs vary in time and also with vendors. This is why the whole concept of "costing" was invented. Basically, if you set the Costing Method of an Item to FIFO, upon posting vendor invoices, the Cost Amount (Actual) of the Item Ledger Entry related to the goods receipt will reflect the actual invoiced cost of the invoice. THIS gets posted to the G/L. When you sell it, the sales Item Ledger Entry will be applied to purchase entry (table Item Application Entry ) and when you run Adjust Cost - Item Entries, it's Cost Amount (Actual) will be set to the same as the cost of the applied purchase entries, and THIS will be posted to the G/L. Therefore, the G/L will reflect the actual cost of the purchases. So these entries get into the G/L, not the Unit Cost field on the Item Card. That field is just a rough estimate of the cost, for rough calculations. There are other costing methods but maybe FIFO is the easiest to understand. Of course it's just a rough model I described here, it's actually a bit more complicated that that, there are configuration options etc.

    I recommend to read the Costing Technical White Paper: http://www.mibuso.com/dlinfo.asp?FileID=382 and requesting the Inventory Costing manual from Microsoft and maybe also the Manufacturing Costing if you are using manufacturing. These describe all you need to know.
  • Miklos_HollenderMiklos_Hollender Member Posts: 1,598
    ... and then tell your boss to hire an analyst with a strong accounting background because it's almost impossible to have an ERP system implemented only by technical guys. An accounting expert, a business operations expert and 2-3 programmers, that's a good team.
  • sivaguru_ksrsivaguru_ksr Member Posts: 100
    Thank You for giving me kind and useful information.

    I will request my boss to Recruit Accounting expert .

    In mean time,i will try download the manuals from partnersite and read.
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