## Updating Costs

This chapter discusses how to:

- Update item costs.

- Work with detail costing in distribution.

### Updating Item Costs

This section provides an overview of item cost updates, lists a prerequisite, and discusses how to:

- Set processing options for Speed Cost Maintenance (P41051).

- Update costs for an item across multiple branch/plants.

- Update costs for multiple items across multiple branch/plants.

- Set processing options for Batch Cost Maintenance (R41802).

- Update average costs for items.

- Update current item costs with future costs.

- Set processing options for Future Cost Update (R41052).

#### Understanding Item Cost Updates

You can use cost maintenance procedures to update costs for individual items or for multiple items in the branch/plants, locations, and lots that you select. You select the cost method to use for updating costs. For example, you can implement a percentage increase in the standard cost for a group of items. If you use the average cost method to determine inventory costs, you can update the average cost for all items. You can increase or decrease costs by a percentage or monetary amount, or you can specify a new amount. You specify the cost method for which you want to update costs. For example, you can update an item's last-in costs, average costs, and so on. Cost changes are effective immediately. You can also update average costs or future costs for all items that you select.

The system stores item costs in the Item Cost File (F4105). After you update item costs, the system updates the F4105 table. After you update costs for an item's sales/inventory cost method, the system creates general ledger (GL) and item ledger records.

See Also

Setting Up AAIs in Distribution Systems

Entering Item Cost Information

#### Prerequisite

Before you complete the tasks in this section, you must verify that automatic accounting instructions (AAIs) for changes to inventory costs are set up.

See Setting Up AAIs in Distribution Systems.

#### Forms Used to Update Item Costs

Form Name | FormID | Navigation | Usage
Work With Location Costs | W41051A | Inventory Price & Cost Updates (G4123), Speed Cost Maintenance | Select branch/plants to work with costs.
Cost Revisions | W4105A | On the Work With Location Costs form, select a record and select Cost Revisions from the Row menu. | Update costs for an item across multiple branch/plants.

#### Setting Processing Options for Speed Cost Maintenance (P41051)

Processing options enable you to specify the default processing for programs and reports.

Defaults

Default cost method | Specify a user-defined code from UDC table (40/CM) that indicates the cost method that the system uses to determine the cost of the item for purchase orders. The system reserves cost methods 01–19.

Process

Standard Cost | Specify whether to change the standard cost. Values are: Blank: Change 1: Do not change.

#### Updating Costs for an Item Across Multiple Branch/Plants

Access the Cost Revisions form.

Sales/Inventory and Purchasing | Enter codes from UDC table (40/CM) that indicates the cost method that the system uses to calculate the cost of goods that are sold for the item. Cost methods 01–19 are reserved for use. If you maintain costs at the item level, the system retrieves the default value for this field from the data dictionary. If you maintain costs at the item and branch/plant level, the system retrieves the default value from Branch/Plant Constants program (P41001).

#### Updating Costs for Multiple Items Across Multiple Branch/Plants

Select Inventory Price & Cost Updates (G4123), Batch Cost Maintenance.

#### Setting Processing Options for Batch Cost Maintenance (R41802)

Processing options enable you to specify the default processing for programs and reports.

Process

Cost Change | Specify the cost change to use for update. If you enter a percentage, enter it as a whole number.
Cost Change Type | Specify the cost change type. Values are: A: Amount percent: Percent *: Actual

Defaults

1. Reason Code | Specify a user-defined code from UDC table (41/RC) that identifies a reason for a transaction.
2. Document Type | Specify a user-defined code from UDC table (00/DT) that identifies a document type.
3. GL Date | Specify the date for the journal entry. If you leave this field blank, the system uses the current period date.

Print

Print Report | Specify whether to generate a report. Values are: Blank: Do not generate. 1: Generate.

Edits

Mode | Specify whether to update files. Values are: Blank: Proof mode. Do not update files. 1: Final mode. Update files.

#### Updating Average Costs for Items

Select Inventory Price & Cost Updates (G4123), Update Average Cost.

Two methods exist for updating average costs for items:

- Interactive.

  You can set the system constants to specify that the system updates average costs interactively.

- Batch

  You use the Average Cost Update program (R41811).

You specify the items, branch/plants, locations, and lots for which to update average costs.

Each time that a transaction affects the current cost of an item, the system updates the Average Cost Work file. You can specify the programs that update the workfile by using Define Average Cost, which contains UDC table (40/AV). When you run the R41811 program, the system:

- Accesses current cost information from the Average Cost Work File (F41051).

- Calculates the average cost for each item.

- Updates the F4105 table.

- Deletes transactions from the workfile.

Before you run the R41811 program, you should be familiar with the cost level of the items that you want to update. You should consider that:

- For all items with a cost level of 1, you must specify ALL for the branch/plant and locations.

- For all items with a cost level of 2, you specify ALL for the locations only.

- If you select to run the update over items from all three cost levels, you should select by item number only.

See Also

Setting Up Constants

#### Updating Current Item Costs with Future Costs

Select Inventory Price & Cost Updates (G4123), Future Cost Update.

You can replace current costs with future costs by using the Future Cost Update program (R41052). You select the cost level of the items for which to update future costs. For example, you can list the future cost for the item and branch/plant on the Cost Revisions form as cost method 05. Then, in the data selection for the R41052 program, select items with a cost method of 05.

After you run the R41052, the system prints a report that lists the new costs, the old costs, and any errors that detail invalid cost methods.

#### Setting Processing Options for Future Cost Update (R41052)

Processing options enable you to specify the default processing for programs and reports.

PROCESS CNTRL

Cost Method | Specify a user-defined code from UDC table (40/UM) that identifies the cost method to be updated with a future cost. If you leave this processing option blank, the system updates the cost that is associated with the current Inventory/Sales costing method.
Document Type | Specify a user-defined code from UDC table (00/DT) that identifies the document type to be used when writing General Ledger and Item Ledger records. If you leave this processing option blank, the system uses document type WD.
Date - For GL (and Voucher) | Specify the general ledger date to be used when writing GL and Item Ledger records. If you leave this processing option blank, the system uses the system date.
Purge Cost Records | Specify whether to purge cost records. Values are: Blank: Do not purge future cost records. 1: Purge future cost records.

Interop

Transaction Type | Specify a user-defined code from UDC table (00/TT) that identifies the transaction type for the interoperability transaction. If you leave this processing option blank, the system does not perform outbound interoperability processing.

### Working with Detail Costing in Distribution

This section provides an overview of detail costing and discusses how to:

- Set up detail costing in distribution.

- Create simulated costs for distribution.

- Set processing options for Simulated Cost Update (R30840).

- Copy manufacturing cost components.

- Set processing options for Copy Cost Components (R41891).

#### Understanding Detail Costing

In a distribution environment, you cannot calculate costs from bills of material or routings. Instead, the Simulated Cost Update (R30840) program uses costs from the F4105 table to update costs in the Item Cost Component Add-Ons table (F30026).

Use a processing option to specify which cost component contains the costs. A, B, and C cost components are not hard coded.

#### Forms Used to Work with Detail Costing in Distribution

Form Name | FormID | Navigation | Usage
Work With Branch/Plant Constants | W41001B | Inventory Setup (G4141), Branch/Plant Constants | Select a branch/plant.
Branch/Plant Constants | W41001H | On the Work With Branch/Plant Constants form, select a branch/plant. | Set up detail costing in distribution.

#### Setting Up Detail Costing in Distribution

Access the Branch/Plant Constants form.

Use Product Cost Detail (Y/N) | Enter a code that indicates whether Distribution programs use the total cost method or the detailed product cost method. Values are: Y: Detail costing N: Total costing

#### Creating Simulated Costs for Distribution

Select Product Cost Detail - Distribution (G4125), Simulated Cost Update.

The Simulated Cost Update (R30840) program for distribution is similar to the Cost Simulation program for manufacturing. Use the R30840 program to copy costs from the F4105 table to the F30026 table.

After you update simulated costs to determine the effect of changes, you can update the frozen costs with simulated values by running a frozen update.

See Also

Setting Up Constants

#### Setting Processing Options for Simulated Cost Update (R30840)

Processing options enable you to specify the default processing for programs and reports.

Process

Purchased Cost Method | Specify the cost method (for example, 01, 02, or 03) to move from the F4105 to the F30026 table. If you leave this processing option blank, the system does not move costs.
Manufactured Cost Method | Specify the cost method (for example, 01, 02, or 03) to move from the F4105 to the F30026 table. If you leave this processing option blank, the system does not move costs.
Cost Type | Specify the cost type (for example, A1 or X1) to use when bringing cost from the F4105 table.

Defaults

Cost Method to Calculate | Specify the cost method to calculate (for example, 01, 02, or 03 ). If you leave this processing option blank, the system uses cost method 07 (standard).

Print

Report Selection | Specify how the report will print. Values are: 1: Print all the selected items. 2: Print only changed items.

#### Copying Manufacturing Cost Components

SelectInventory Price & Cost Updates (G4123), Copy Mfg. Cost Components.

The Copy Cost Components program (R41891) copies costs from the F30026 table to the F41291 table. You can copy simulated or frozen costs for the cost method that you specify.

#### Setting Processing Options for Copy Cost Components (R41891)

Processing options enable you to specify the default processing for programs and reports.

From

1. Cost Method | Specify a user-defined code from UDC table (40/CM) that identifies the cost method to copy. If you leave this processing option blank, the system does not copy costs.
2. Costs to be Copied | Specify which costs should be copied. Values are: 1: Simulated 2: Frozen

Landed Costs

3. Effective From Date | Specify the effective from date for the cost component. The default is today's date. This date is used for effectivity checking on existing cost components and for writing new cost components.
4. Effective Thru Date | Specify the effective through date for new cost components. The default is December 31st of the century change year.

Default

5. GL Class Code | Specify a user-defined code from UDC table (41/9) that identifies the GL category code.
6. Supplier Number | Specify an address book number for your supplier.