Sunday, December 09, 2007

Inventory Costing

Every Positive inventory quantity is applied against a negative quantity this is known as the item application and this information is maintained in Navision in a table called 339 - Item Application Entry

The Item Application Entry table has three columns which can be used to track the base of a entry these columns are:
1. Item Ledger Entry No.
2. Inbound Item Entry No.
3. Outbound Item Entry No.

The Item ledger entry is the base for this tracking in every line the item ledger entry no would be equal to one of the two columns "Inbound Item Entry No" or "Outbound Item Entry No" the column which is not equal is the column which resulted into the currenty entry.

Entries are usually applied according to the cost flow assumption that is defined by the costing method. However, if more accurate information about the cost flow exists, the user can overrule the general cost flow assumption by using a fixed application, which creates a link between an inventory decrease and a specific inventory increase and vice versa.

In the case of average cost items, a fixed application has the purpose of avoiding errors in the average cost calculation. Creating a fixed application can be useful, for example, when correcting an erroneous posting. Item ledger entries that are applied to each other are not valued by average. The two relevant entries serve to cancel each other, and the sum value of the Cost Amount (Actual) field for the transaction becomes zero. Thus, the program excludes it from the normal average cost calculation

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