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Average cost nightmare: How to FIX?
Hello Everyone,
We recently came across an average cost nightmare that stopped our operation. We should have noticed this earlier, but it was overlooked for a month. We created an outsourced manufacturing purchase order with an incorrect rate of 1000 USD per outsourcing charge instead of their actual rate is $1. The purchase order was then received and the assembly was built. The employee did the correct thing because they corrected the purchase order when they noticed the discrepancy but it was after they had received it which in turn created the build at the incorrect rate.
The issue we are facing is that the assembly build overstated our inventory by a crazy amount. Now our Inventory, COGS, and Average cost are all over the place.