COGS Question

Keith_Wander

Member
If items are issued directly to a sales order without having a work order produced, how does cost of goods sold populate?

Scenario: Purchase item X from vendor. Sell item X without value added, to the customer. If there was no work order, how is COGS recognized? Will it be captured? Everything I've been led to believe is that COGS is dependent upon Work Orders.

Thanks for the assist in advance!

Keith
 
Date: Thu, 16 Nov 2000 05:09:11 -0800 (PST)
To: [email protected]
From: Keith Wander <[email protected]>
Reply-to: [email protected]
Subject: COGS Question ~~0:1212

If items are issued directly to a sales order without
having a work order
produced, how does cost of goods sold populate?

Scenario: Purchase item X from vendor. Sell item X
without value added, to the
customer. If there was no work order, how is COGS
recognized? Will it be
captured? Everything I've been led to believe is that
COGS is dependent upon
Work Orders.

Thanks for the assist in advance!

Keith




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Cost of Goods Sold comes from the item/branch record. There is a flag in
the item/branch which tells the system which cost method to use for both
inventory and sales transactions. Also check the item master flag for cost
level--items may be costed at the item master, item branch, or
item/branch/location/lot level. Many clients use average cost (cost method
02) as their COGS. Other options include Last In cost (last received cost),
specific lot cost, or any user defined and maintained cost.

It is also worth noting that there is a little known module called Advanced
Stock Valuation which does a good job of FIFO or LIFO costing without using
lot numbers. At the end of each month a process is run which calculates a
General Ledger adjustment to COGS and the Inventory account based on FIFO or
LIFO layers. (You can also use this module for Weighted Average Costing as
well.)

If you do a direct ship order, where you place your order with your supplier
and he ships to your customer, then the cost of the purchase becomes the
cost of the sale automatically. The system creates both the Sale and the
Purchase at the same time.

You can also use Advanced Pricing to book costs to a COGS account. Use a
type 4 adjustment which does a G/L accrual, but does not affect the price on
the sales order. The only problem with this method is that profitability
analysis may be difficult, because the cost gets into the G/L, but not into
the Sales Order. I have a client that is looking at the new Profit
Management module (system 16) to get around this problem.

Andy Klee
Klee Associates
JD Edwards Certified Professional
Tel: 970 856 4811

www.JDETips.com
 
Keith,

COGS posting is controlled by AAI 4220. The value used for COGS is the value of the item cost method that is specified as the Sales/Inventory costing method for the item in Cost Revisions (P4105). The item cost can be maintained at the Item level, the Item Branch/Plant level, or the Item/Branch/Location level, as specified on the Item Master.


Tim Lyons
Computer Results Company
336-808-3415
 
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