Quick Guide
- Make the Item Costing Setup
- Define the costing periods
- Archive data / Calculate actual data
Introduction
Eos Solutions' Inventory Valuation and Costing (IVC) app allows you to implement inventory valuation "scenarios" using different costing configurations. It also supports the following features:
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Definition of calculation scenarios
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Capability of calculating freely defined periods such as date ranges and calculation parameters
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Valuation at average operating cost, weighted average or LIFO
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Valuation can be carried out by article or by LIFO category, with the possibility of defining the LIFO cross article categories.
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Valorisation for article / variant, article / lot, article / nr. of series
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Management of additional costs aimed at full costing
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Archive and reuse historical data such as Items , Bills of materials and Routings
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Drill down to detailed costs to see Capacity / Components / Subcontracting costs
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Evaluate WIP costs
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Load pre go-live cost information to enable evaluation in the first year of adoption
Subscription |
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Some features of the Inventory Valuation and Costing (IVC) App require a subscription. The subscription can be activated from Subscription control panel or directly from the notification messages that the system proposes, by clicking on the link that allows you to start the subscription wizard. For more information visit Eos Solutions |
Inventory Valuation and Costing (IVC) - SUMMARY
Press ALT + Q e digit "IVC" for a summary of the involved functionalities:
Item Costing Setup List (IVC)
Open Item Costing Setup List (IVC):
Some parameters must be specified for the correct operation of the procedure:
• Calculation of the production cost;
• Calculation of capacity costs;
• Evaluation of purchased items and products;
• Weighted average cost calculation method, etc.
From New open a new card:
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Campo |
Opzione |
Descrizione |
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Production Cost Calculation (it is used to define the parameters for the production cost calculation) |
Standard Routing/BOM |
The calculation is carried out with standard times and consumptions; the cost used depends on the value of the Capacity Cost Calculation field. |
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Actual Entries |
Everything is taken into account with the actual production entries |
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| Consider Purchase in Standard BOM | This field has an impact on the calculation logics only if a production item also has Purchase type movements and the value of the "Production cost calculation" field is filled in with the "Standard Routing/BOM" option. | |
| Include | By setting the field to the value "Include": when calculating the cost of production items, the system will also consider any purchases made during the period; | |
| Exclude | By setting the field to the value "Exclude": the system will exclude all Purchase type movements from the calculation of the production items. | |
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BOM/Routing Reference Date |
Start/End Period Date |
It allows you to define the date with which you calculate the production costs, if at the beginning of the period and at the end of the period. It is relevant if the versions of the lists and routings are used, otherwise it is irrelevant: usually if the versions of the lists / routings are used, the End Period value is used (more recent versions) |
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BOM/Routing Status |
All/Only Certified |
Defines whether to consider all the BOM/Routings in the calculation, or whether to use only the certified ones. It has an impact if you are working on separate lists / routings, otherwise it is irrelevant. |
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Purch. Item Valuation |
Average Cost / Weighed Average Cost |
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Prod. Item Valuation |
Average Cost / Weighed Average Cost |
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WAC Calc. Use Same Setup |
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Weighed Average Cost Method |
Italian Fiscal Method (works like a LIFO a scatti with only one group for the initial stock) |
(GI x CMP + (GF – GI) x CM) / GF Where: · GI = initial inventory stock · GF = final inventory stock · CMP = Weighed Average Cost CM = average cost of the period NB: If GI> GF the cost of the previous
fiscal year is used.. |
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Italian Civil Method |
(GI x CMP + PA x CM) / (GI + PA) Where:
· CM = average cost of the period |
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Continuous FIFO Cost |
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If active on the item, the continuous FIFO cost is calculated, in addition to the cost calculated according to the methodology defined on the master data. |
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Continuous LIFO Cost |
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If active on the item, the continuous FIFO cost is calculated, in addition to the cost calculated according to the methodology defined on the master data. |
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Enable Custom Addit. Cost |
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If active, enable the additional management cost |
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EOS LIFO Method
(present only if the “IVC
for Italy” app has been installed). |
Item/LIFO Category |
Determines the calculation logic with the LIFO
a scatti method: Iteme or LIFO Category. |
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Skip Job Entry (usually to be set to Yes if job management is used. |
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If active, the entries, both item accounting and capacity, which refer to the orders, are excluded from the valuation. Normally the flag is activated in the presence of specialized verticals on the management of orders (PSA, Industry). |
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Subcontracting Cost Priority 1, priority
2, priority 3 |
Routing Line, Actual Entries, Subcontracting Prices |
Defines the cost recovery hierarchy relating to external processing. |
| Average Cost - Include Purch. Cr. Memo | The functionality of this field is exclusively linked to items with the "Purchase" replenishment system. Activating this field makes it possible to include credit note documents in the calculation of the "Average cost", for lines of the type Item. | |
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Item Specific Cost Calc.(defines the method for calculating the Average Cost / Weighted Average Cost of the item, if the specific costs calculation by variant, lot, series no. is active |
Inventory |
The average cost / weighted
average cost of the item is calculated as inventory value /
quantity (as if the specific costs are not active). |
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Amount |
The average cost / weighted average cost of the item is the weighted average of the lots / serial / variants in stock at the end of the period on the total final stock. |
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Capacity Cost Calculation |
Entry Actual Cost |
Cost recovered from posted production entries (Capacity accounting entries). |
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Budget |
Cost recovered from Work Centers. Useful for carrying out cost simulations deriving from changes in hourly rates. |
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Standard Cost |
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Cost Type Rollup: to be filled in if you want to split, according to the additional costs table, the 3 cost components in further details (e.g. the raw material divided by type of item) and / or to separate the accessory purchase costs managed as Article Charges.
In this setup it is possible to define whether the splitting of the material cost, in the Cost Nature (IVC) page, should occur based on the “Gen. Product Posting Group” indicated in the Item registry:
Cost Nature (IVC)
On this page it is possible to define the additional cost types that you intend to manage:
| Field | Option | Description |
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Additional cost |
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allows you to specify whether the cost is intended as an actual additional cost or if it is a specification of one of the cost components managed by the program. |
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Cost type roll-up |
Material Cost |
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Capacity Cost |
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Subcontracting Cost |
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| Gen. Product Posting Group / Item Charge Code Filter | They allow you to define the detail of the material cost split. | |
| Standard Task Code / Work Center Filter | They allow you to define the detail of the subcontracting cost split. |
The detail of the Capacity Cost split must be defined by completing the "Cost Nature" page, linked to the Production Areas / Work Centers master data.
Item Costing Period Management (IVC)
This page allows you to calculate the various types of cost of the items in the warehouse for the reference periods, determining the fiscal value of the warehouse for each period. The processing of a period occurs with the following steps:
• Manual creation of the period
• Data archiving: reference data are archived (items, lists, routings etc.)
• Calculation of actual data: with this activity the various types of item costs are calculated according to the parameters defined in the setup
• Calculation of LIFO category costs: to be used only if the costing is made for LIFO category
The main features are:
| Azione | Descrizione |
| Archive Period data | To generate a local version of the item master data, which now also includes fields for calculating the various types of costs associated with them. It is a method of calculating costs that takes place alongside the standard. The cost calculation methods are defined in the setup as illustrated above |
| Calculate Actual data | to calculate costs for previously stored data |
As standard cost, the one present in the item card is inherited, so it is not calculated by the costing
After performing the calculation, by clicking on History->Item History, it is possible to consult the various types of cost calculated for the single item:
You can consult also:
• Report->Print Data Detail
• Report->Item Costing Card
The Item card contains all the information relating to the valuation of the item for the reference period and in particular each cost is divided between the cost components at "Single level" and "Rolled-up":
•Direct Materials Cost (Materials/Components)
•Direct Capacity Cost (deriving from internal processing times)
•Actual Subcontracted Cost (rom external work carried out by subcontractors)
For each of the 3 direct cost components, the system can manage the corresponding general / indirect cost items.
Specific costs calculation
Cost management for Lott / Variant / No. series consists of filling the field "Product Family Code " in the item card:
For the period being calculated, the "Calculate specific cost" flag must also be set: :
The effects of the calculation are:
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If in the “Item Costing Setup (IVC)” the field " Calc. Specific Cost" is compiled with "Amount": in "Average Cost" and "Weighted Average Cost" of the period management are listed the average costs per lot / serial / variant calculated as weighted average costs depending on the quantity of each single lot / serial / variant on the total final amount.
The average costs of the individual lots / serials can be analyzed by selecting the "Specific Cost" action while those of the individual variants, through the "Variant Cost" action:
Within this report, it is possible to select the type of cost to use for inventory valuation:
• Standard Cost
• Average Cost
• Weighted Average Cost
• FIFO Cost
• LIFO Cost
• Last Cost
• Fiscal Cost
In case the "Fiscal Cost" type is selected, the print report will behave as follows:
1) If the item master data has the Product Family Code field filled, the cost used for fiscal purposes will be the one defined in the "Fiscal Cost in the inventory valuation report" field.
2) If the item master data does not have the Product Family Code field filled, the cost used for fiscal purposes will default to the Weighted Average.
Filling in the "Product Family Code" field in the item master data can therefore be useful only if different costs are to be assigned in the "Fiscal Valuation IVC" report."
Data updating
• The action “Update Item Costs” can ONLY be used if you want to overwrite the unit cost / standard cost of the item card. Not to be used until after careful evaluation.
• The actions “Update Item Entries and "Update Capacity Entries”are used ONLY if you want to update the entries based on the costs calculated by the costing of Business Central. They use logic similar to that of the BC standard adjustment. Not to be used until after careful evaluation.
Before Start Item Cost (IVC) - Import
A precondition for the correct calculation of the Average / Weighted costs and of the LIFO bands is the import of the Before Start Item Costs (especially if the initial stocks have been imported as "Positive adjustments").
The following image shows the instructions for the preparation of the Excel sheet "Import Before Start Item Cost" for the calculation of the Average Weighted Cost:
After the massive import, the data can be changed manually by accessing the "Import Before Start Item Cost (IVC)" page.
Import LIFO bands from previous years LIFO management
Normally the LIFO bands from previous years are recovered from the old system and imported massively, using a path identical to that of the table below.
LIFO Calculation (IVC) / Costing LIFO Official Report (IVC)
Il LIFO is calculated at the end of the year; to perform the calculation it is necessary to launch LIFO Calculation (IVC).
On the page "Item Costing Period Management (IVC)" there must be a period relating to the calculation LIFO year with the "Definitive" and "Fiscal Period" flags valued at Yes.
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“Definitive” flag: It must be set only when the LIFO calculation is not forecast but it's definitive. The definitive LIFO bands can no longer be changed. |
At the end of the calculation process it is necessary to execute the Costing LIFO Print (IVC) report. If a filter is not applied to the item or any information related to the item, all the items with LIFO bands are printed.
Bin exclusion
This function allows to exclude from the calculation of the amount of the period the warehouse entries present in certain locations indicated in the setup. In the Item Costing Period Management there is the related flag "Bin Exclusion Enabled":
The locations to be excluded from the calculation, for each Location Code, must be indicated in the Excluded Bins (IVC).
WIP calculation
Setup: to perform the WIP calculation it is necessary to activate the "Calculate WIP" flag for the period being processed:
Processing: after having performed the "Archive Period Data" and "Calculate Actual Data" functions, you can access the "Wip history":
All production orders included in the calculation are shown and, through Manage-> View, you can access the detail card of the single order.
• The "Cost Amount" field in the header indicates the WIP value calculated for the specific order;
• “Prod. Order Component Wip” Tab: contains the enhancement of the components used for items not yet stocked in the warehouse as Output (partially or completely). In the example above : 10 pieces were consumed for each component but partial output was recorded (5 out of 10 pieces).
• Prod. Order Routing WIP” Tab: contains the enhancement of the capacity movements (run time + setup time) recorded for items not yet stocked in the warehouse as Output (partially or completely). In the example above : Capacity accounting entries were recorded for 122 minutes (total expected to produce 10 pcs) but a partial Output was booked in the warehouse (5 out of 10 pcs). Generally for internal machining, the calculation is carried out according to the declared / actual times, for the Subcontracting according to the pieces.
Wip History (IVC)
The calculated data can be viewed through the Wip History (IVC) report:
Print example:
