## Thursday, 13 September 2007

### Unit Cost field in Item Card

Unit Cost field contains the cost per unit of item. This cost will be used to initialize cost in Sales Order and Sales Journal.

How Navision update the Unit Cost field is depends on what costing method used for the item.
1) Standard Costing - Unit Cost will be copied from Standard Cost field. Unit Cost will be updated when you change the value of Standard Cost. If you change the value in the Unit Cost field, the Standard Cost field will be updated as well.
2) Other Costing methods - Use the following formula:

Unit Cost = Inventory Value of Item on hand (cost expected + cost invoiced) / Quantity on hand

If you are not using Standard Costing, Navision will only update the Unit Cost field when you run Adjust Cost-Item Entries.

Besides updating the Unit Cost based on the above formula, Navision will also update the Unit Cost with the value in Last Direct Cost field in Item card when post purchase order as invoiced if one of the following conditions is met:

1. Net invoiced quantity changes from negative to zero or positive.
2. Unit Cost in Item card is zero -

The cost captured in the Unit Cost field is the total of both direct and indirect cost. The direct cost consist of the actual cost for the item purchased while the indirect cost may consist of the overhead cost such as insurance, handling and trasportation cost. If you can idenfity and want to maintain the indirect cost for the item seperately, you can use either one or both of the Overhead Rate field and Indirect Cost % field to capture the indirect cost. For example, the direct cost for Item A is \$0.80 and the indirect cost is \$0.20. You need to enter \$1.00 in the Unit Cost field and \$0.20 in the Overhead Rate field. Please note that the Unit Cost is \$1.00 (\$0.80 + \$0.20). Navision will be able to calculate the direct cost for you automatically while doing posting based on the information in the Overhead Rate and Indirect Cost % fields.

#### 1 comment:

Tomás Crespo said...

Wonderful explanation, but, how could I force a unit cost?