![]() ![]() You physically receive a quantity of 101 at USD 202.00.You financially issue a quantity of 200.You financially receive a quantity of 100 at USD 100.00.Scenario: The following transactions occur for an item that you've selected the Include physical value option for: However, there are steps that you can take to avoid pricing amplification, or to reduce its impact when it does occur. This scenario can cause estimates of the running average cost price to be overly inflated. On rare occasions, the system prices several issues before it has enough receipts to base the price on. ![]() For information about this option, see Include physical value. If the Include physical value option isn't selected for an item, the system uses 0 (zero) for both the physical amount and the physical quantity. ** Denominator = (Physical quantity + Financial quantity) * Numerator = (Physical amount + Financial amount) The numerator*, denominator**, or both are negative. The system uses the default item cost priceīoth the numerator* and denominator** are positive. The system uses the estimated running average cost price The following table shows when the system posts inventory transactions by using the running average cost price, and when it uses the cost price that is defined on the item master record instead. If you have a cost price in an active costing version, and you enter a price on the Manage costs FastTab, the system will use the price from the active costing version before it uses the price that is defined on the Manage costs FastTab. For example, if you post a purchase order invoice, the field will be set to the purchase price from that invoice. In this case, the system will automatically update the Price field when you post a financial update. In addition to entering or creating a price, you can select the Use latest cost price checkbox on the Manage costs FastTab of the Released product details page. Define a default item cost price for a released product by entering a value in the Price field on the Manage costs FastTab.If you use this method, you must use a standard cost costing version, and the cost must be activated. Create a standard cost by selecting Item price in the Set up group on the Manage costs tab of the Action Pane.The default item cost for a released product can be configured in one of two ways on the Released product details page: The system estimates this running average cost price for an item by using the following formula:Įstimated price = (Physical amount + Financial amount) ÷ (Physical quantity + Financial quantity) Default item cost However, before inventory close is run, the system calculates a running average cost price that is typically used when issue transactions are posted. The inventory close process settles issue transactions to receipt transactions, based on the inventory valuation method that is selected in the item’s item model group.
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