Inventory Costing

The topic covers inventory costing specific to tags

Topics

Value VS Cost

Accruals

Value VS Cost

Inventory Value (asset) VS inventory Cost (expense)…. For accounting purposes, consider two entities, what is VALUE and what is COST.

Inventory Value is defined using Steel cost, Freight In (including RAIL), Processing, Scrap, Debit, Markdowns (including Cost Avg(s)) and Write downs. The value is calculated using the INVOICE WEIGHT.

1) Inventory Cost (revised price) includes ALL of the above. PLUS, storage, freight out, adjustments, credit cost, usually, the value is used with the SCALE WEIGHT. Why consider scale weight, these are expenses, not assets.

Plus, the invoices received from vendors are based on scale weight.

2) Inventory Value VS inventory Cost, in most cases will never match and cannot be compared against each other, they are different all together for accounting purposes.

We know this to be bit confusing, but the system keeps track of every cost attributed to material, both on value and cost side.

Accruals

If you have Accounting Style 2 setup, the system works on Accruals.

An Inventory Tag carries the following:

COST Type	Where/When Accrual is created
FRTIN - Freight IN	-Receive from PO - when receiving from PO it will ask you for freight rate -Release - on release of type "transfer", when the release is closed
FRTOUT - Freight OUT	-Release - when creating an invoice from a release of type "Release"
OTH - Other	.
STO - Storage	.
RAI - Rail	.
PRO - Processing	-Receive from PO - when receiving from the OPPO (Outside Processing PO), make sure the rate is on the setup
Debit	.
Credit	.
SCR - Scrap	-Receive from PO - when receiving from the OPPO and the loss of weight from master
Write Down	.
Mark Down	.
ADJ - Adjustment	.