|
Improving the Accuracy of Inventory Cost Entry
One of
the strengths of Sage PFW is the parameter-driven nature of many
of its operational characteristics. Proper understanding and use
of these parameters will contribute to more accurate data entry
and fewer accounting related problems. Two examples below illustrate
this point:
1) Problem
#1
Too often, invalid unit costs are being entered for Purchase Order
Inventory Line Items:
Solution
Sage PFW will allow an organization to default as to how to
associate unit costs with Inventory Line items. A default method
can be set by accessing Application Setup within the Purchase
Order module and then setting the 'Unit Cost Default Method' on
the [Entry] tab to the choice best suited to the Inventory business
model. The choices (as shown in the screen shot below) are: Last
Cost, Standard Cost or None.
* If 'None'
is chosen then data entry operators will be required to enter
an Item's unit cost for every PO Inventory Line Item entered.
* If 'Last Cost' is chosen as the default then the Line Item unit
cost at data entry time will automatically default to the Item's
Last Cost
* If 'Standard Cost' is chosen as the default then the Line Item
unit cost at data entry time will automatically default to the
Item's specified Standard Cost.
The default
to choose for this parameter should be governed by the Inventory
method being used. For example, if Purchasing of Inventory type
Line Items is primarily for Raw Materials to be used in manufacturing
operations and if the Raw Materials Inventory Items are of Inventory
FIFO (or LIFO) then the 'Last Cost' default makes sense.
The screen shot below shows the choices that can be made for this
parameter.
Use of the
appropriate default can significantly reduce the instances of
erroneous costs being entered and posted and then propagating
incorrect values into subsequent transactions.
2) Problem
#2
Too often, invalid unit costs are being entered for Inventory
Transaction Line Items.
Solution
Use the 'Allowable Cost Fluctuation' Parameter found on the
Inventory Module/Application Setup/Transaction Information Tab
to specify an acceptable 'unit cost deviation percentage' to be
imposed during Inventory Transaction entry;
Use of a suitable percentage value in this field imposes the following
constraints.
When the Inventory Transaction Edit Report runs, the system verifies
that:
* The cost of an item using the FIFO (or LIFO) costing method
is within the designated percentage above or below the last cost,
as stored in the Item Location file.
* The cost of an item using the standard costing method is within
the designated percentage above or below the standard cost, as
stored in the Item Location file.
For example, if you want to insure that the costs used within
(over or under) 10 per cent of the Last Cost, enter 10 in this
field. If you enter a unit cost in Transaction Entry that falls
outside this 10 per cent limit for Last Cost, the system assigns
the transaction a warning status on the Edit Report.
- Nonny Beckerman
- Senior Consultant, Evron Computer Systems Corp.
|
