Cost -- Average or Last

The posted cost for an item comes from the Order Processing line item which, for the most part, has the cost assigned at the time the item is placed on the sales order.

The cost can be updated/changed if:

1. The line item is backordered
2. Then the item goes on the “Want List” in Purchasing
3. From the “Want List” the item is added to a Purchase Order
4. The item is then received and vouchered in P/O with a new cost prior to the customer order being invoiced.

Which cost is used depends on how an O/E parameter is set.  Go to:

• Order Processing (Module 6)
  • System Management Functions (Task 32)
    • Modify Parameter Files (Sub-task 22)
      • O/E General (Option 1)
        • Look for the parameter:  DFLT’CST’FLG
          • ​Choices are A for Average, L for Last (Hint: most clients use A for Average)

HOWEVER – there is an overriding condition that can occur.  If the quantity available on the material item is less than zero the last cost will be used, since that cost would generally be the better estimate of what you will pay for the item from that point forward.

Another optional overriding condition is for serialized items, which typically is set to use the actual cost of the item being sold.  The cost for serialized items is also based on a parameter setting.  See:  SERIAL’COST’FLG in Order Processing parameter files (same parameter file as DFLT'CST'FLG)