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Old 08-27-2017, 08:51 AM
MVTrotz MVTrotz is offline
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Unit of Measure change and the impact on average cost

Hello - I have switched certain inventory items over to a multiple Unit of Measure and this seems to have affected the average item cost as shown in the item details window. The specific sequence of events is as follows:

1. I went into single user mode for the first item and enabled the multiple units of measure functionality.

2.Then I defined the roll as the basic unit of measure and a case as an additional unit consisting of x (say) rolls.

3. Finally, I set up the case as the default unit of measure for purchases and the roll as the default unit of measure for sales, and saved this definition as "Case of x sold by the roll". Everything else was left untouched.

I have noticed that the purchase cost number for each of the SKUs changed in this way is being defined as a cost for a roll (even though the SKU used to have a single unit of measure as a case, with that same number being the cost for a case).

Additionally, the average cost at the bottom of the item description window is now a lot higher than it was before, even though no transactions have been done since the change (I thought that number should only change as items are bought and sold) so my concern is that this number has been affected by the changes made. It appears that the cost and price figures are now going to be defined using the basic unit (rolls), but the new average cost figure is much higher than it should be if this were the case.

I think that the system is (re) interpreting the previous purchases of each of these items as expensive rolls (even though they were actually cases) - hence the sharp increase in the average cost. My thinking now is that I need to do an adjust value & count to bring the average cost back to the correct value before using the new UoMs going forward. Would this address the issue?

If I do an adjust value and count, what adjustment account should I use?

Alternatively, is it possible to somehow pull up the transactions (purchases ) that QuickBooks has in its memory for each of these items to see how they have been changed to come up with this new average cost figure? If I can do this, I might then be able to correct these entries to reflect the fact that the purchases were cases (each of x rolls) instead of a single expensive roll, if that is the cause of the problem.

This might be the better route, if previous transactions have been changed, as any financial reports based on those transactions may now be inaccurate. The other advantage is that we have been on QuickBooks for less than 5 months so the transaction history will not be that long.

Any suggestions would be appreciated. Apologies for the long post.

Thanks,


Michael Trotz

Last edited by MVTrotz; 08-27-2017 at 08:55 AM.
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  #2  
Old 08-28-2017, 06:34 AM
Rustler Rustler is offline
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From the sounds of it you were buying by the case and selling by the case, one case = a qty of one. So yes changing the item to have a qty of each = one part of the case will change average cost.

QB thinks the qty of one you purchased in the past is one roll now.

To fix this requires two adjustments

create a clearing account, expense or asset, makes no difference.

1. inventory adjust, set the adjustment TYPE to qty & value, set the adjusting account to the clearing account, set the new qty block to zero, set the new total value block to zero and save.

that moves the total value to the clearing account.

2. inventory adjust, set the adjustment TYPE to qty & value, set the adjusting account to the clearing account, enter the total value from the clearing account in the new total value block, then enter the correct count for rolls on hand, save.

close and reopen QB and check the item, QB does not always immediately update inventory lists in memory, so it is better to close and reopen allowing QB to read the list all over.
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