A common misconception is that the cost of an item on a Sales Order that is linked to and being fulfilled by a Purchase Order will reflect the cost of the item(s) received on that PO. This is not how GP works.
If you're using FIFO or LIFO Perpetual valuation method, the cost will always be based on the next available layer in the FIFO or LIFO stack unless the item is serial or lot controlled.
If you're using Average Perpetual, the cost will always be the Average Cost unless the item is serial or lot controlled..
If you're using Periodic (Standard) then the cost will always be the Standard Cost unless the item is serial or lot controlled.
Bottom line is, if you want the actual cost from a PO to flow to a Sales Order/Invoice, it must be a serial or lot-controlled item.
4 comments:
Great clarification. Kinda makes me wonder why, if an item is linked to a PO, the cost on the SO would not be the same as on the PO, but I can understand if from a costing perspective.
But it would make it difficult to calculate an accurate gross profit for a particular sales order, if the costs used are not the same as the actual cost of the items on the PO.
Hi Chris,
Yes, one would think that's the way it SHOULD work. I thought that too until I tested it recently.
Thx, Frank
Is there any spiceal setup needed to get cost from Item Lot on SOP.
i use avarge cost on that item.
Thanks all
Alfred
Alfred, the item of course needs to be a Lot controlled item. As long as you make sure you select the correct lot when invoicing the item(s), it should result in the correct cost being associated with the SOP transaction.
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