Cost of Sales Updating

Datafile Software

Cost of Sales Updating

When standard stock items are sold through Sales Order Processing the cost price on the stock record at the time of order input is used as the cost of sale, whilst costs can be updated later (via copy items) this isn’t always as accurate as using FIFO when stock costs are highly volatile. Whilst the delivery note (or stock updating document) can be set to ‘Update Cost of Sales Using Stock Cost’ which will use FIFO if this option invoked this only updates the stock transactions and not the sales order.

With batch items costs are usually updated in the same way although an option exists if pre-allocating batches (and using a single batch per order line) to update the cost from the batch record.

Two new options are added to the Delivery Note (or Stock Updating document) to assist with cost of sales. Firstly the system can be set to update the cost-price on the order detail record from the FIFO table so that subsequent sales invoices use the more accurate cost, and secondly for batch tracked items the system can be set so that the cost price is picked up from the batch.

When updating the cost price on the order file the system will use averaging where appropriate. If the order line covers more than one FIFO slot (or more than one batch) then the system calculates an average cost based on the values selected. For example if you order 15 items and the FIFO table determines you need 10 @ £10.00 each and 5 at £9.00 each then the cost-price recorded on the SOD is £9.67

Where part-deliveries occur then on the second+ delivery the system will take into account the qty / cost-price of any items already delivered (but not invoiced) when updating the cost price. For example if you order 15 items and deliver 5 with a cost of £10 each the cost price is updated as £10, if you subsequently deliver another £10 which cost £9 each then the cost would be updated as £9.33 if the earlier 5 has not yet been invoiced or as £9.00 if the earlier 5 has been invoiced.

Installation

To enable the new option to update costs on the order from FIFO/Batch details two additional parameters have been added to the SOP Document Design.To update the parameters Diamond and Premier users should select Installation from the main menu followed by Application Manager and Document Design Manager, Professional users select Installation followed by Document Design Manager.

Select the Sales Order Documents option followed by Delivery Notes (or Invoices if invoice updates stock) and then select the required document layout.The new options are enabled via screen 18 of the document parameters – select the Parameters option at the top of the screen and use the ACTION button to move to screen 18 of the parameters.

Update Cost of Sales using Stock Cost – this existing parameter (when set) allows stock cost of sales to be updated using the FIFO table. When set from 6.4 a new pop-up will be displayed showing additional parameters.

Use Batch Cost rather than Stock Cost (if appropriate) – applicable for Diamond and Premier systems where batch tracking is in use, when set if item set for batch/serial tracking then the cost price for updating stock cost of sales will use the batch cost rather than the FIFO cost table.

Update Sales Order Unit Cost – if set then in addition to updating stock costs from FIFO/Batch values the system will also update the cost price on the sales order detail so that subsequent sales invoices will use the FIFO/Batch cost price for cost of sales.

In addition to updating the UNIT-COST item on the sales order detail database, Diamond and Premier systems can also update a LAST-COST field which, when using part-deliveries, would record the cost of the last delivery on the sales order. If this item required then a new data item is required on the order detail database to hold this value.

To add this item select Installation from the main menu followed by Application Manager, Restructure a Database and then select the Sales Order Processing application. When prompted Change the Live Files respond ‘Y’ and select the Sales Order Detail file. The existing data items are then displayed on screen, scroll-down to the next available blank entries and create the following items: File, Item, Name, Type, Description

SOD LAST-COST K, L, M Holds the last cost calculated for a delivery. Set as K, L or M to match the existing UNIT-COST data item.

To insert a new item press <Enter> against a blank entry, enter the title as required and press <Enter>, select the item type (using the drop-down list if required), and depending on item type select the size required.

Once the required item has been recorded press <ESC> and then select the UPDATE button to save the database changes.When prompted respond ‘Y’ to the prompts to ‘Extract Existing Data to New Database Structure’ and, if appropriate, ‘Copy Table Entries from Old Database to New Database’. Final prompts ask to ‘Remove (.OLD) Database’ and to ‘Carry Out the Same Restructure on the BASE File as well’ – respond as required.If you select to update the base file you need to manually insert the new items at the same data item positions as on the live file.

The new data items need to be referenced within the Database Profiles. To update these settings select Installation from the main menu followed by Application Manager and Set Database Profiles. Choose the Sales Order Processing application before selecting the Detail Optional 6 parameter screen.

On the left of the screen is the prompt Last Delivery Cost– against this item reference the data item number of the equivalent item created above, <F4-Select> is available if required.

Article ID: 89
Created On: Mon, Jun 11, 2012 at 11:06 AM
Last Updated On: Wed, Jun 14, 2023 at 5:02 PM