On-Hand Inventory Financial Cost vs Transaction Costs

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Lyle HendersonFeb 24, 2023 12:34 PM

******************************** UPDATE* ******************** Our issue is that we were not looking ...

Steven ElandFeb 27, 2023 02:12 AM

Agree this report can get very confusing when using fifo. One thing I would say too is always enter ...

1. On-Hand Inventory Financial Cost vs Transaction Costs

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Lyle Henderson

Posted Feb 24, 2023 12:34 PM
Edited by Lyle Henderson Feb 24, 2023 02:59 PM

********************************UPDATE*********************

Our issue is that we were not looking at all lines of the on-hand query for the specific lots in question. We were only looking at the records that had physical on-hand inventory. There were additional lines for the same inventory dimensions with the adjusted Financial costs. Summed together and we were able to see the total costs.

***************************************************************

We are trying to understand what should the standard system behavior be for updating on-hand inventory financial cost.

We import product from China so the freight and duties will increase the inventory cost quite a bit once all of the charge adjustments have been made to the original PO. For this type of product, we use FIFO and each item is batch controlled, so we are trying to maintain actual cost by batch. What we are finding is that, after making adjustments to the product PO to include the freight and duty charges, we will perform an inventory recalc. Once that is done, the cost/unit on each transaction of that batch found in the transaction table all get updated correctly. However, we are not seeing the actual on-hand inventory financial cost values get updated. Shouldn't the on-hand financial costs also get recalculated?

One other point is that we also split the original batch into separate pcs as a result of how we manage the inventory of this product, each with their own serial number. So in my example below, we currently have three "lots" of the original batch. After all of the original charge adjustments to the PO, the actual cost per unit should be $0.361, and that is what the transaction table is showing for all transactions of this batch. However, only one of the "lots" is showing this value of the on-hand inventory. The other two "lots" are significantly different:

Batch number	Serial number	Inventory status	Physical inventory	Financial cost amount	Cost per unit	Avg Tranx Cost per unit
R075516	S001505376	Available	28,660.50	13,283.23	0.463	0.361
R075516	S001637148	Available	3,504.00	2,248.86	0.642	0.361
R075516	S001695450	Available	2,040.00	736.75	0.361	0.361

#FinanceandOperations #SeriesCostAccounting

------------------------------
Lyle Henderson
IT Manager
Beltservice Corp.
Earth City MO
------------------------------

2. RE: On-Hand Inventory Financial Cost vs Transaction Costs

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Steven Eland

Posted Feb 27, 2023 02:12 AM

Agree this report can get very confusing when using fifo. One thing I would say too is always enter your purchase invoices and end any works orders before the end of your month.

Posting the financial cost of an inventory transaction 2 or 3 months after the physical transaction can lead to confusion.

I ended up stepping through this with Microsoft and the reason was as described.

Though not always possible, better ap practice and housekeeping can often make this report read better!!

Original Message

Original Message:
Sent: 2/24/2023 12:34:00 PM
From: Lyle Henderson
Subject: On-Hand Inventory Financial Cost vs Transaction Costs

********************************UPDATE*********************

Our issue is that we were not looking at all lines of the on-hand query for the specific lots in question. We were only looking at the records that had physical on-hand inventory. There were additional lines for the same inventory dimensions with the adjusted Financial costs. Summed together and we were able to see the total costs.

***************************************************************

We are trying to understand what should the standard system behavior be for updating on-hand inventory financial cost.

We import product from China so the freight and duties will increase the inventory cost quite a bit once all of the charge adjustments have been made to the original PO. For this type of product, we use FIFO and each item is batch controlled, so we are trying to maintain actual cost by batch. What we are finding is that, after making adjustments to the product PO to include the freight and duty charges, we will perform an inventory recalc. Once that is done, the cost/unit on each transaction of that batch found in the transaction table all get updated correctly. However, we are not seeing the actual on-hand inventory financial cost values get updated. Shouldn't the on-hand financial costs also get recalculated?

One other point is that we also split the original batch into separate pcs as a result of how we manage the inventory of this product, each with their own serial number. So in my example below, we currently have three "lots" of the original batch. After all of the original charge adjustments to the PO, the actual cost per unit should be $0.361, and that is what the transaction table is showing for all transactions of this batch. However, only one of the "lots" is showing this value of the on-hand inventory. The other two "lots" are significantly different:

Batch number	Serial number	Inventory status	Physical inventory	Financial cost amount	Cost per unit	Avg Tranx Cost per unit
R075516	S001505376	Available	28,660.50	13,283.23	0.463	0.361
R075516	S001637148	Available	3,504.00	2,248.86	0.642	0.361
R075516	S001695450	Available	2,040.00	736.75	0.361	0.361

#FinanceandOperations #SeriesCostAccounting

------------------------------
Lyle Henderson
IT Manager
Beltservice Corp.
Earth City MO
------------------------------

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