2 Replies Latest reply on Sep 1, 2009 1:32 PM by 643952

    AVG cost and Standard Cost In Inventory R12

    643952
      Can anyone tell me the differnece between avg cost and stndrd cost in inventory

      Our Orgs are all avg costed.We need to update the rates of items as they are all wrong.Inventory gives an option of Average Cost update

      If i update costs, what is it actually going to update.All the previous transactions rate or the rates of new transactions or what

      Please advice
        • 1. Re: AVG cost and Standard Cost In Inventory R12
          639961
          You can look the details in the cost management user guide p 1-7 for comparation
          to summarize, standard costing values your inventory based on a predefined cost for every inventory asset items, any variance of cost caused by different PO price / inventory value from other IO are to be journaled against the purchase price variance account.
          average costing values your inventory based on a moving average cost for every inventory asset items. your inventory values will move along with different costs of inventory transactions.

          in the case of cost update, you specify the increase / decrease of your items' values, and upon adjusting, an adjustment journal will be created
          this new unit cost will be used in new transactions, as old transactions are already being record in accounting, in case of perpetual costing. For periodic costing, the updated cost will be used for all transactions in that period

          for details and procedures please refer to the user guide.

          Thanks
          • 2. Re: AVG cost and Standard Cost In Inventory R12
            643952
            thanks gerry

            i remember you helping me in all my threads
            You look pretty experienced

            I have some threads opened ..they are on the first page

            one is about costing and other is about PO accounts

            See if you can help me on those
            any help would be greatly appreciated

            thanks again
            Emm