Item Costs and Valuation Methods: To Sell Items with the Average Method

The following activity demonstrates how to process to completion a sale of stock item that is assigned the Average valuation method.

Story

SweetLife Fruits & Jams is a midsize company, which purchases fruit, jams, and spices from large fruit vendors and then sells these goods to wholesale customers such as restaurants and cafes. Peach jam is among these goods. The PEACHJAM08 stock item (which represents a small 8-ounce jar of peach jam) has been assigned the Average valuation method in MYOB Acumatica.

Earlier SweetLife bought peach jam as follows:

• On December 1, 2023, 10 boxes of peach jam for $85 each that were received at the main warehouse location
• On December 15, 2023, 10 boxes of peach jam for $90 each that were received at the main warehouse location
• On December 20, 2023, 10 boxes of peach jam for $92.25 each that were received at the fruit warehouse location for which costs should be tracked separately. These boxes were bought from a particular vendor for a higher price for a special customer project, but later the customer refused to buy them.

On January 30, 2024, the FourStar Coffee & Sweets Shop customer ordered 30 boxes of the jam. Acting as the SweetLife's sales manager Regina Wiley, you need to process the sale and review the cost of the peach jam issued from the warehouse.

Configuration Overview

In the U100 dataset, the following tasks have been performed for the purposes of this activity:

• On the Enable/Disable Features (CS100000) form, the following features have been enabled:
  • Inventory and Order Management, which provides the standard functionality of inventory and order management
  • Inventory, which gives you the ability to maintain stock items by using forms related to the inventory functionality and to create and process sales and purchase documents that include stock items
  • Multiple Warehouse Locations, which gives you the ability to create multiple locations and store stock items at these locations
• On the Customers (AR303000) form, the COFFEESHOP (FourStar Coffee & Sweets Shop) customer has been created.
• On the Stock Items (IN202500) form, the PEACHJAM08 stock item has been created and the Average valuation method has been assigned to the stock item.
• On the Warehouses (IN204000) form, the WHOLESALE warehouse has been created, and on the Locations tab, the following locations have been defined:
  • The default MAIN location added by the system
  • The F4S1 fruit location, for which the Cost Separately check box has been selected
• On the Receipts (IN301000) form, three receipts have been created and released as follows:
  • A receipt that has 10 units of the PEACHJAM08 item with the cost of $85 and is dated 12/1/2023. The item has been received to the MAIN location.
  • A receipt that has 10 units of the PEACHJAM08 item with the cost of $90 and is dated 12/15/2023. The item has been received to the MAIN location.
  • A receipt that has 10 units of the PEACHJAM08 item with the cost of $92.25 and is dated 12/20/2023. The item has been received to the F4S1 location.

Process Overview

In this activity, you will do the following:

1. On the Inventory Summary (IN401000) form, review the costs of the purchased jam at different warehouse locations.
2. On the Sales Orders (SO301000) form, create a sales order.
3. On the same form, quick-process the sales order.
4. On the Inventory Transaction Details (IN404000) form, review how the stock item has been issued and its cost has been calculated.

System Preparation

Before you start performing the steps of this activity, do the following:

1. Launch the MYOB Acumatica website with the U100 dataset preloaded, and sign in as sales manager by using the wiley username and the 123 password.
2. In the info area, in the upper-right corner of the top pane of the MYOB Acumatica screen, make sure that the business date in your system is set to 1/30/2024. If a different date is displayed, click the Business Date menu button, and select 1/30/2024 on the calendar. For simplicity, in this activity, you will create and process all documents in the system on this business date.

Step 1: Reviewing the Costs of the Purchased Item

To review the average costs of the PEACHJAM08 item at the locations of the WHOLESALE warehouse, do the following:

1. Open the Inventory Summary (IN401000) form.
2. In the Selection area, specify the following criteria:
   1. Inventory ID: PEACHJAM08
   2. Warehouse: WHOLESALE
3. Review the costs (see the screenshot below). Notice the following:
   • The item's average cost in the MAIN location is $87.5. It was calculated as the total item cost divided on total item quantity in the warehouse: (10*85+10*90)/20=87.5.
   • The item's average cost in the F4S1 location, whose costs are tracked separately, equals the item's unit cost of $92.25.

   
   
   

Step 2: Creating a Sales Order

To create the sales order for the FourStar Coffee & Sweets Shop, do the following:

1. On the Sales Orders (SO301000) form, add a new record.
2. In the Summary area, specify the following settings:
   • Order Type: SO
   • Customer: COFFEESHOP
   • Date: 1/30/2024
   • Description: Sale of 30 boxes of peach jam
3. On the table toolbar of the Details tab, click Add Row.
4. Specify the following settings in this row:
   • Branch: HEADOFFICE
   • Inventory ID: PEACHJAM08
   • Warehouse: WHOLESALE
   • Quantity: 30
5. On the form toolbar, click Save.

Step 3: Quick-Processing the Sales Order

To process the sales order, do the following:

1. While you are still viewing the Sale of 30 boxes of peach jam order on the Sales Orders (SO301000) form, on the form toolbar, click Quick Process.
2. In the Process Order dialog box, which opens, do the following:
   1. In the Warehouse ID box, make sure that WHOLESALE is selected.
   2. In the Shipment Date section, make sure that Today is selected.
   3. In the Shipping section, make sure that the following check boxes are selected:
      • Create Shipment
      • Confirm Shipment
      • Update IN
   4. In the Invoicing section, do the following:
      1. Make sure that the Prepare Invoice check box is selected.
      2. Select the Release Invoice check box.
   5. Click OK. The Processing Results dialog box opens. Wait for the system to create the documents.
   6. Close the dialog box. Notice that the sales order now has the Completed status.

Step 4: Reviewing the Costs of the Sold Item

To review how the system has calculated the costs for the issued PEACHJAM08 item, do the following:

1. Open the Inventory Transaction Details (IN404000) form.
2. In the Selection area, specify the following criteria:
   • Period: 01-2024
   • Inventory ID: PEACHJAM08
3. Review the amounts in the table (see the following screenshot). Notice that the cost of the 20 items issued from the MAIN location is 1,750.00, which means that the system calculated the average unit cost of one item as $87.5 (the average of $85 and $90). Also notice that even though the warehouse is the same and the valuation method is Average, the system has issued the 10 items from the F4S1 location at the separate unit cost of $92.25.