To update total unit average costs:For average cost organizations only, you can directly update the average cost of items to include additional costs, such as freight, invoice price variances, or job variances. You can update one or more cost elements or levels (this and previous) individually or to the total unit cost. Any change made to the total unit cost is spread to all cost elements and levels in the same proportion as existed prior to the update.
Note: Average cost updates that fail can be viewed and resubmitted, using the View Material Transactions window from the Cost function. See Error Resubmission.
You can make the following three types of updates:
A new average cost - enter the new cost by cost element and level (and the new total unit cost is automatically calculated), or enter a new total cost (the amount of change will automatically be proportioned across all cost elements and levels); on-hand inventory in all subinventories in the cost group will be revalued. If you are updating the cost of an item in common inventory, the cost of that item in intransit owned by the current organization will also be updated.
The percentage change in the unit cost - select cost element(s) and level(s) to adjust up or down (and the new total unit cost will be automatically calculated), or adjust the total (the percentage change will automatically be applied to all cost elements and levels); on-hand inventory in all subinventories in the cost group will be revalued.
The value change by which on-hand inventory is to be incremented or decremented - select cost element(s) and level(s) to be adjusted or adjust the total and the system will revalue on-hand inventory by that amount and recalculate the item's average cost for the cost group. You cannot change the average cost in this way unless the item has quantity on hand.
Additional Information: Average cost update transactions are inserted into the Open Item Interface in Oracle Inventory. Update transaction details can be viewed using the Transaction Interface Details window. This window is accessed using the Cost Detail button from the Oracle Inventory Transaction Interface window. See: Viewing and Updating Transaction Open Interface.
See: Oracle Inventory Open Interfaces, Oracle Manufacturing, Distribution, Sales and Service Open Interfaces Manual.
To update total unit average costs:Navigate to the Update Average Cost window.
Select a transaction date.
You can select any date within an open period, up to and including the current date.
Select the Average cost update in the Type field.
Optionally, select a Source type for the transaction.
Source types define origins for transactions.
Select an average cost update Adjustment Account.
If you increase average costs, then debit your subinventory accounts and credit the specified adjustment account. If you decrease average costs, then the reverse adjustments are generated.
You must select an Adjustment Account.
If you are updating costs using a percentage change, then enter a default to use as the percentage change for individual item costs.
Select the item for the average cost update.
Select a Cost Group.
If the Project References Enabled and Project Cost Collection Enabled parameters are set in the Organization Parameters window in Oracle Inventory, you can select a cost group. See: Organization Parameters Window
If these parameters are not set, the organization's default cost group is used.
Update the total unit average cost. Do one of the following:
Enter a New Average Cost. This value cannot be negative. On-hand inventory in all subinventories and intransit are revalued.
Enter a percentage change in the item's average cost. The item cost is updated by this percentage value. On-hand inventory in all subinventories and intransit is revalued.
Enter the amount to increase or decrease the current on-hand inventory value. To decrease the value, enter a negative amount. However, you cannot enter a value that drives the inventory value negative.
On-hand inventory is revalued by this amount and the item's average cost is recalculated by dividing the on - hand quantity into the new inventory value. You cannot change the average cost value by this method unless the item has quantity on - hand.
The offset to the inventory revaluation in all cases above is booked to the average cost adjustment account(s) specified at the time the update is performed.
Specify the adjustment quantity (Adjustment Qty) for value change.
If the on-hand at the time of cost processing is greater than the user-specified Adjustment Quantity, then the entire value change due to landed cost adjustment is applied to inventory valuation.
If the on-hand is less than the user-specified Adjustment Quantity, then only the proportionate value change is applied to the on-hand quantity. Inventory valuation is performed for the on-hand quantity based on the proportionate value change. The left-off value goes to the Expense account specified by the user.
Note: Adjustment Quantity can be entered only for Average Cost Update - Value Change transaction. Adjustment Quantity cannot be entered for Average Cost Update - New Cost or percentage transaction.
Open the Accounts tabbed region and enter an Expense account for adjustment quantity adjustments.
Open the Value Change tabbed region and review the change in inventory value.
Optionally, open the Comments tabbed region and enter a reason for the transaction. Use a reason code to classify or explain the transaction.
Optionally, enter up to 240 characters of reference text.
Optionally, choose Cost Elements to update average costs by element by level.
To update average costs by element and / or level:Navigate to the Cost Elements window. Choose the Cost Elements button from the Update Average Costs window.
For each level and / or element, do one of the following:
Enter a New Average Cost. On-hand inventory in all subinventories and intransit is revalued.
Enter a percentage change in the item's average cost. The item cost is updated by this percentage value. On-hand inventory in all subinventories and intransit is revalued.
Enter the amount to increase or decrease the current on-hand inventory value. On-hand inventory is revalued by this amount and the item's average cost is recalculated by dividing the on-hand quantity into the new inventory value. You cannot change the average cost value by this method unless the item has quantity on-hand.
See the Oracle Landed Cost Management Process Guide for complete details on setting up and using Landed Cost Management.
The offset to the inventory revaluation in all cases above is booked to the average cost adjustment account(s) specified at the time the update is performed.
Save your work.
Other Sources
Overview of Average Costing, Oracle Cost Management User's Guide
Transaction Types, Oracle Inventory User's Guide
Defining and Updating Transaction Source Types, Oracle Inventory User's Guide
Defining Transaction Reasons, Oracle Inventory User's Guide