Item Costs and Valuation Methods: General Information

MYOB Acumatica automatically tracks costs of stock items over time according to valuation methods assigned to each item. The cost of a stock item unit is money that a company spends to produce or purchase a single unit of this stock item. The cost of a unit is a key part of the cost of goods sold (COGS) calculation and is used for sales and inventory transactions. Costs are tracked for items in base units of measure (UOMs)—that is, the UOMs in which items are stored at warehouses or moved between warehouses or warehouse locations. The valuation method defines how item unit cost should be calculated in the system.

Learning Objectives

In this chapter, you will do the following:

Become familiar with valuation methods that define the costs of stock items
Process sales documents with stock items that are assigned different valuation methods and review the calculated costs of stock items

Applicable Scenario

You may need to assign a particular valuation method to a stock item to make the system track the item's cost based on how your company currently sells and purchases the item.

Valuation Methods

The functionality that supports assigning valuation methods and tracking stock item costs is available if the Inventory feature is enabled on the Enable/Disable Features (CS100000) form.

In MYOB Acumatica, you can assign one of the following valuation methods to a stock item:

Average: For details, see Item Costs and Valuation Methods: Average Method.
FIFO (first in, first out): For details, see Item Costs and Valuation Methods: FIFO Method.
Specific: For details, see Item Costs and Valuation Methods: Specific Method.
Standard: For details, see Item Costs and Valuation Methods: Standard Method.

You specify the Valuation Method for a stock item on the General tab of the following forms:

Item Classes (IN201000): You assign a valuation method to a class, which will be used for newly created items of the class.
Stock Items (IN202500): You assign a valuation method to a particular item if you want to override the valuation method of its item class.

You can change an item's valuation method only if the on-hand quantity of the item in stock is 0.

Note: The decimal precisions for quantities, prices, and costs are determined by the values specified in the Quantity Decimal Places and Price / Cost Decimal Places boxes, respectively, on the Companies (CS101500) form.

Tracking of Costs at Warehouses and Locations

The calculation of costs for stock items is performed on a per-warehouse basis. When an item is received in a warehouse, its quantity and cost are recorded in a cost layer. In MYOB Acumatica, a cost layer is a record of an item's quantity and cost that is calculated based on the valuation method assigned to this item.

If the Multiple Warehouse Locations feature is enabled on the Enable/Disable Features (CS100000) form, and your company uses multiple locations in a warehouse, the system will include the costs of all item's quantities in all locations during the calculation of the item's cost in this warehouse.

If you need to track stock item costs only at a particular warehouse location, such as a location where items are stored for a specific project, the system allows you to track item cost per location separately. To do this, you select the Cost Separately check box on the Locations tab of the Warehouses (IN204000) form for the needed location. With this check box selected, a separate cost layer is created for a stock item at this location on release of an inventory document. If a certain quantity of an item is issued from this location, the extended cost will be calculated based on the location-specific cost layers. The item’s quantities and cost in this location are not included in the item's cost in this warehouse.

Note: You can select the Cost Separately check box for a location only if the on-hand quantity of stock at this location is 0.

For each warehouse, on the Warehouses form, in the FIFO Default Cost and Average Default Cost boxes, you can select either the Average or Last option. If an item is assigned the FIFO or Average valuation method, respectively, the selected option defines which cost the system will specify in the Unit Cost column on the following forms:

On the Details tab of the Sales Orders (SO301000) form for lines with both the Issue and the Receipt operations:
- In a sales order line with the Issue operation, the populated Unit Cost value is used for the calculation of the estimated margin amount: When an item is shipped and the inventory issue is released, this item will be issued from a warehouse with a unit cost calculated according to its valuation method.
- In sales order line with the Receipt operation, the Unit Cost value will be populated based on the selected option if no original unit cost has been found in the system: This unit cost will be posted to the Inventory account when the item has been received back in stock.
  Note: If the original unit cost has been found in an issue related to the original invoice (if any) specified in the Invoice Nbr. column, the system will use this unit cost by default.
On the Physical Inventory Details tab of the Physical Inventory Review (IN305000) form, the populated Unit Cost value is used for stock items with a positive Total Variance Qty. column value: This unit cost will be posted to the Inventory account on the release of an inventory adjustment.