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Costing doubts ?

askingasking Member Posts: 37
edited 2009-05-03 in NAV/Navision Classic Client
I have some doubts regarding costing

1. Irrespective of what my costing method is NAV is going to calc average cost at every transaction. Is this right ? "Exception here is standard".

2. COGS will get updated on sales and will be posted either if you have automatic cost posting check or if expected then after u run adjust-cost item entries(which will adjust as per my respective costing method) and then run post cost go G/L. I hope this is correct.

3. Costing methods i cud understand by looking at postings in system as i did 100s of entries with all scenarios and i think up to some extent i got them but still could not understand what valuation date is.

I saw many postings on valuation date on this forum but still could not get it. :(

Is this the date when for the first time i receive the item(order wise) ? or it is the date when i invoice my order ? or is this the date when systems posts the adjustment entries. Got confused by looking at entries which i did by myself. Now too much bugged and looking for a conclusion. :cry:

If i receive my item on 10/02/09 and invoice it on 12/02/09. Sell it on 14/02/09. Receive an item charge invoice and apply it on 14/02/09 with some additional 10% of my basic item cost. Then after running adjust items cost and post cost to G/L what my valuation date will be ?[/i]

So i thought for basics let me create a new company and start posting data while reading pdfs which i did and has been good so far, got up to some extent but got stuck here. ](*,) So just need a little push of support from u guys. So that i can be an expert some day. \:D/ :mrgreen:

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    KowaKowa Member Posts: 918
    1. Yes, but this moving average is only accurate if the item cost adjustment is run. Starting with Version 4 SP1, automatic cost adjustment can be activated in the inventory setup to get an "online" adjustment within the posting routine.

    2. Same as above. COGS are also calculated when report 795 "Adjust Cost - Item Entries" is run or by automatic cost adjustment. You can post the cost to the G/L, but some companies prefer not to do this. Instead they do this manually once a year after the Phys. Inventory. Item cost adjustment is compulsory, the G/L posting an option.

    3. The valuation date is basically the date, from where on the cost amount in the value entry in question is taken into account when the moving average is calculated. If there are no backdated postings or revaluations, this will be equal to the posting date. But there are lots of scenarios where these will differ.

    Two examples for FIFO :

    If you post a revaluation journal to change the value of positive item ledger entries, then post transactions (item ledger entries) which have a posting date before the posting date of the revaluation, the valuation date of the value entries which are assigned to these item ledger entries will be the date of the revaluation and not the posting date. This would be the case if the posting date of the transaction is equal to or later than the revaluation.

    Also, if you have negative stock and purchases are not posted chronologically, the valuation date for the last postings will be later than the posting date. If you post the purchases for the month of May, then find an old one from April for the same items lying under the desk :wink: , the item application has already taken place with the May postings. That means , that the first May purchase invoice was wrongly applied to the April sales. These item applications are not reopened if you post the delayed purchase invoice later (in Version 5 , you can do this manually afterwards, if you like). The value entries of the April purchase will then receive a valuation date after the last May invoice, even though the posting date is in April. That means the direct unit cost of the delayed April invoice will have no influence on the COGS for April. This is expressed by the valuation date in May. If you assign a date filter to the item or SKU card, you can see an average item cost for any day in the past (in Versions 3 and 4, in Version 5 the separate average unit cost field was removed). But this only works because the date filter selects the value entries by the valuation date and not by the posting date.
    Kai Kowalewski
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