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

The following activity demonstrates how to process to completion a sale of stock item that is assigned the FIFO 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. Pear jam is among these goods. The PEARJAM32 stock item (which represents a medium 32-ounce jar of pear jam) has been assigned the FIFO valuation method in MYOB Acumatica.

Earlier SweetLife bought pear jam as follows:

• On January 5, 2024, 20 medium jars for $7 each
• On January 15, 2024, 30 jars for $7.25 each

Suppose that you are Regina Wiley, a sales manager at SweetLife. The FourStar Coffee & Sweets Shop customer ordered 25 jars of pear jam. You need to process the sale and review the cost of the pear 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
• On the Customers (AR303000) form, the COFFEESHOP (FourStar Coffee & Sweets Shop) customer has been created.
• On the Stock Items (IN202500) form, the PEARJAM32 stock item has been created and the FIFO valuation method has been assigned to the stock item.
• On the Receipts (IN301000) form, two receipts have been created as follows:
  • The 000092 receipt that has 20 units of the PEARJAM32 item with the cost of $7.00 and is dated 1/5/2024
  • The 000093 receipt that has 30 units of the PEARJAM32 item with the cost of $7.25 and is dated 1/15/2024

Process Overview

In this activity, you will do the following:

1. On the Inventory Transactions by Account (IN403000) form, review the costs of the purchased jam.
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 Transactions by Account 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 costs of the PEARJAM32 item at the WHOLESALE warehouse, do the following:

1. Open the Inventory Transactions by Account (IN403000) form.
2. In the Selection area, specify the following criteria:
   • Inventory Account: 12100 - Inventory Asset
   • Inventory ID: PEARJAM32
3. Review the items that were received at two different costs (see the following screenshot).

   
   

   

   
   

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 25 jars of pear 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: PEARJAM32
   • Warehouse: WHOLESALE
   • Quantity: 25
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 25 jars of pear 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 Item's Costs

To review how the system has calculated the costs for the issued PEARJAM32 item, do the following:

1. Open the Inventory Transactions by Account (IN403000) form.
2. In the Selection area, specify the following criteria:
   • Inventory Account: 12100 - Inventory Asset
   • Inventory ID: PEARJAM32
3. Review the amounts in the table (see the following screenshot). Notice that the 25 items were issued as follows:
   • 20 units of the item at the unit cost of $7.00 that were received earlier
   • 5 units of the item at the unit cost of $7.25 that were received later