How are the (Standard) Unit Cost and Current Unit Cost on the Items form populated and used?


Overview on how Standard Unit Cost field , Unit Cost field and Current Unit Cost field on Item Form

Solution ID = KB-236

Goal : How are the (Standard) Unit Cost and Current Unit Cost on the Items form populated and used?

Version = All Version

Module : SLMFG

Fact : INV

Database : Progress, SQL

Cause


(STANDARD) UNIT COST

The population and use of this field changes depending on the item's cost type and method. Regardless of the type and method, the breakdown of this unit cost into material, labor, fixed overhead, variable overhead and outside cost can be viewed on the left side of the Item Master Cost Maintenance screen.

If the item's Cost Type is Standard, the label will change to Standard Unit Cost and the field will hold the item's standard cost. For new item's with zero on hand and which have had no material transactions (new items), you can enter a standard cost on the left side of the Cost Maintenance screen. Otherwise, this standard cost can only be changed by running the Roll Current Cost to Standard Cost utility. This standard unit cost is what is used for inventory valuation and is used for posting to G/L for all transactions which move the item in or out of inventory.

If the item's Cost type is Actual, the field label will be Unit Cost. How it is used depends on the cost method.

Average: The Unit Cost will hold the item's average cost which is being used for inventory valuation and is the cost at which the item next be issued. It is updated using a weighted cost calculation everytime the item is received into inventory. It can also be chagned at any time by changing the breakdown on the left side of the cost maintenance screen.

LIFO/FIFO: The value in the Unit Cost field is mostly informational. The actual costs being used for inventory valuation and issuing the item are being stored in the LIFO/FIFO stack which can be viewed from the Item Stockroom Locations screen. With these methods, the Unit Cost will show you the next cost at which the item will be issued. It will either be the cost that's in the top (or oldest) record in the stack if FIFO or the cost in the bottom (or newest) record in the stack if LIFO. It is updated by the system as records are consumed from or created on the top or bottom of the stack (FIFO or LIFO)

The only relevant use of the this field by the system is that it is the cost that will be used if the item's on hand is driven negative since there are no records in the stack if there are zero on hand. You can only change this value on the cost maintenance screen if the item has zero on hand and there have been no material transactions for the item. This is so you can enter a beginning LIFO/FIFO cost for a new item for use if the on hand is driven negative before it is ever received.

Specific: It is also mostly informational for Specific in that it holds the last cost at which the item had been received. The valuation and issue costs for the item can be viewed on the Item Stockroom Location Unit Cost Detail screen if the item is not lot tracked or the Item Lot Location screen if lot tracked. It is also the cost used of the item's on hand goes negative. It is updated anytime a receipt into inventory is processed for the item (PO receipt, job move to stock, etc.)

CURRENT UNIT COST

The Current Unit Cost is used the same way for all cost types and methods. How is is populated depends on whether the item is purchased or manufactured. As with the unit cost, the breakdown of the current unit cost can be seen on the cost maintenenance screen where the system maintains both a purchased and manufactured current unit cost. The current unit cost will contain one of those two values, depending on its P/M code.

For standard costing, the current unit cost is what is rolled into the standard unit cost field when you run the Roll Current to Standard utility. For actual costing, the current unit cost really has no direct impact on the actual costs flowing through the manufacturing modules and G/L.

Purchased: This field is only updated by the system when you enter a PO receipt for the item. The way receiving updates it depends on how the "Update Current Cost" flag is set in the purchasing parameters. If (L)ast, the PO unit cost is put into the current field. If (A)verage, the system puts the result of a weighted average calculation into the field using the old current cost, the old quantity on hand, the PO cost and the incoming quantity. If (N)one, PO receiving will not update the field.

The breakdown can be seen on the cost maintenance screen and will be material cost plus duty, freight and brokerage if you are using landed costing. You can also manually change it by updating the Purchased Current Unit Cost in the top right corner of the cost maintenance screen.

For purchased items, the BOM Cost Rollup utility rolls this cost into the manufactured items which have the item in their current BOM provided you answer no to the "Use Std Cost for purchased items" option. Otherwise, it rolls the standard cost for the purchased item up into the parent items.

Manufactured:  For manufactured items, the Current Unit Cost reflects the unit cost of the item based on its current routing and BOM. It is populated by the BOM Cost rollup and then in turn is rolled up into any manufactured items which contain the item it their BOM. It is also updateed on-the-fly when you make changes to an item's current routing and BOM. Its breakdown into material, labor, fixed and variable overheaed and outside cost can be seen in the Manufactured Current Unit Cost area of the cost maintenance screen. 

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