Weighted Average Cost Varying from Standard Cost

[Mohammed Sajid]

Hello List,
The Weighted Average Cost of an Item is having a very large variation from its Standard cost i.e. Std Cost is 90.19 and Wt. Avg Cost is showing 2873.46.
For another item the Wt Average cost is showing negative value.
Because of which my Inventory Stock Report is showing greater value than it actually would be.
What could possibly have gone wrong. How do I correct this situation.

 

[Bill Meyer]

Pick out an item where you are having a large discrepancy and validate the transactions which have hit the Item Ledger/cardex/G4141. Maybe run R41550 The Inventory Journal report for several of your more serious differences and see what is happening. I suspect on analysis you will see the transactions which are impacting the weighted average cost i.e. credit notes maybe, odd one off purchasing transactions.
Whenever I have compared weighted average to standard costs, I have run inro the same issues. I you are looking to use the weighted average as a base to do your next years standards, a lot of analysis / cleansing is required. One way is to run a "PROOF" frozen cost roll using the weighted average cost method. The resulting report shows the possible inventory revaluation which may happen vis a vis standard, by item.
Good Luck
Regards,
Bill

 

[Kristin Fury]

Do you allow negative on-hand? Weighted Avg gets screwed up when balances go negative.

Are you doing on-line or batch average cost update? If batch, how often are you running the batch update?

What programs are updating average cost? UDC 40/AV lists the programs. Desc 2 with a Y means those transactions will update average cost. This is a global setting by application.

Alternative: Applications you could consider to turn off as part of the Avg Cost update ... Physical Inventory, Inventory Adjustments, Inventory transfers, Sales Order ... i.e. those programs are where Unit Cost is usually protected or hidden which means the cost of the transaction is always Standard so there is no change to Avg Cost. I'm mentioning these applications because they are usually the ones that result in negative inventory and neg inventory is usually the cause of nonsensical Avg Cost.

Review and decide after due diligence and research!!!!

Kristin
JDE Distribution Consultant

 

[Mohammed Sajid]

Thank U list,
I was able to identify the problem.
We had added new locations to the branch plants, and they were made as primary locations. The system is setup to have cost maintained at item/branch/location level. But since the cost was not setup for the newly added item/branch/locations, all the transcations which happend had zero unit cost.... which really messed up the Wt. Avg Cost.
We reversed all those transactions .... changed the location back to original (the one having the cost).... re-entered the transactions.

 

[liuross]

Hi Mohammmed,

hope you are doing well, see i am actually facing the same issue where new locations were created, bot i was not able to identify the set up for cost in the mentioned locations, cour you please explain a little bit more detailed how could you solve it