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Overview
The re-cost inventory with freight screen was created as a means of adding shipping costs to screen is used to update the average cost of inventory. The average cost of inventory is the purchase cost that an item is received into inventory with, this does not include and any freight that may be charged for shipping the items to youapplied against the PO. This screen will allow you to recalculate the average cost of an item to include freight and adjust your inventory carrying cost (average costs of all of the like items) accordingly.
So if you had 9 items in inventory at an average cost of $10 apiece and you received 1 item at $10 apiece, you would have 10 items for $100 cost or an average cost of $10 apiece. However if the last shipment did not have free freight and there was a $10 shipping fee, you would take the total inventory carrying cost ($100) and add the shipping cost of one item you just received ($10) for a total inventory carrying cost of $110 and divide that by 10 items to get a new average cost of ($11.00). In this screen you can pull up the item and the warehouse it is stored at and the current cost will show in the grey boxes. Enter the new average cost of $11.00 and press the process transactions icon. Behind the scenes this screen will issue all of those items out of inventory at the 10.00 per cost and then receive 10 items back in at the new 11.00 cost. This will show on your inventory transaction tab so you will have an inventory audit trail and any variance will post to your AP variance account to cover the accounting audit trail.
INV > Transactions > Re-cost Inventory Items
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How-To
Re-costing an item is simple. Select your branch, enter date, item, and warehouse. Set your New Cost and hit Process Transactions. The system will issue out and receive the inventory to correct the cost. You will see the transactions on the Item transaction history and the Inventory posting to GL.
Step-by-Step
Open the Re-cost screen
INV>Transactions>Re-Cost Inventory Items
Select the Branch to update
This sets the GL accounts
Set the date you want the transactions to occur
Select Item and Warehouse
Enter your new Cost
Process the re-cost
Hit Process Transactions button
Detail
Here is a breakdown of each field on the screen.
Branch (dropdown) – This dropdown sets which branch will be affected by the recost. It will change the GL accounts being hit.
Re-Cost date – this will be the date of the re-costing transaction, tabbing through will default to the current date.
Item - the item that you are trying to re-cost
Warehouse – the warehouse that the item is located in, each warehouse has its own set of average costs so you will want to specify the warehouse you are changing. If you leave the warehouse blank you will be prompted that you are updating all warehouses, this in most cases in not ideal so be cautious.
Current cost – this will be the current costs in the warehouse that you chose
New costs – this will be the new cost that you have calculated.
Accrual Account – This field displays the Accrual Account the re-cost will be applied against. Changing the Branch will change this account.
Inventory Account – This field displays the Inventory Account that the re-cost will be applied against.
Process Transaction (button) – This button will re-cost your item