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  • Average Cost Info Polluted

    Due to a large number of transactions being done incorrectly, the average cost information has become polluted. What would be the easiest way to reset the average cost to the purchase cost?

  • #2
    You can go to Vendors>Inventory Activities>Adjust Inventory>Adjust Quantity/Value on Hand. You will need to correct the cost and post the difference to some type of expense account. You may want to create an account for this purpose - Inventory Adj. Expense.
    Suzanne M. - "Better Books"
    Certified Quickbooks ProAdvisor in Pro.,Prem. & Enterprise
    suzannemead@msn.com / suzannemead@comcast.net

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    • #3
      Use the Inventory Adjustment and select Value Adjusntment. DO NOT change the quanity, just the TOTAL value of the items. Be sure that the date for ten adjustment is just before the date the purchases were entered correctly. QB will "adjust" all of the COGS from the adjustment date!!!
      Joe Williams
      joewilliams@wavelinx.net
      Piedmont, Ok

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      • #4
        The average cost is calculated from all preceeding transactions, so the timing of adjustments is critical. Look at an Inventory Valuation Detail report to see the progress of the average cost. Whenever a sale is recorded the cost used to calculate COGS is that in effect on that date. If you adjust the cost after that date, previous sales will not be recalculated, only the ones that come after.

        Could we talk about the incorrect transactions?
        Joyce Beck
        joyce@pc-firstaid.com
        ------------------------------------------------------------------------------
        Accounting and bookkeeping support, QuickBooks Pro Advisor
        Home and small business computer services in Northampton, UK

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        • #5
          Incorrect Transactions

          Originally posted by RobJoy View Post
          The average cost is calculated from all preceeding transactions, so the timing of adjustments is critical. Look at an Inventory Valuation Detail report to see the progress of the average cost. Whenever a sale is recorded the cost used to calculate COGS is that in effect on that date. If you adjust the cost after that date, previous sales will not be recalculated, only the ones that come after.

          Could we talk about the incorrect transactions?
          What would you like to know about the transactions?

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          • #6
            What were they? It is too easy to get the inventory costing in a mess, then make more mess trying to put it right, so I'm wondering if we could steer you towards correcting those transactions, rather than entering adjustments, which ought not to be used unless they're unavoidable.

            For instance, if someone recorded 100 items @ $5 instead of 10 items at $50, there is a better answer than an adjustment.
            Joyce Beck
            joyce@pc-firstaid.com
            ------------------------------------------------------------------------------
            Accounting and bookkeeping support, QuickBooks Pro Advisor
            Home and small business computer services in Northampton, UK

            Comment


            • #7
              Average Cost Problem

              I have two inventory assemblies that I have no idea what they are basing the average cost on. One has an actual cost of approximately $12K, but the average cost is over $300K. I don't want to do an adjustment to fix this because I don't want that vast discrepancy to be showing as an expense. I've checked the cost information on the individual items used in the bill of materials, and changing them has absolutely no effect on the average cost. How can I get this amended without doing an inventory adjustment?

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              • #8
                Run the Inventory Valuation Detail report and filter it for one of the Assembly items and set the Date to All. Now sort it by Type and the balance will show the TOTAL cost of the item.
                Joe Williams
                joewilliams@wavelinx.net
                Piedmont, Ok

                Comment


                • #9
                  The inventory valuation detail report only shows one line ...the inventory build assembly. There isn't anything to sort. It does show the total cost...which is over twice the actual cost, and there is only one in inventory.

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                  • #10
                    When you zoom on it does it show the breakdown of the cost?
                    Joe Williams
                    joewilliams@wavelinx.net
                    Piedmont, Ok

                    Comment


                    • #11
                      Originally posted by hgonzales View Post
                      I have two inventory assemblies that I have no idea what they are basing the average cost on. One has an actual cost of approximately $12K, but the average cost is over $300K. I don't want to do an adjustment to fix this because I don't want that vast discrepancy to be showing as an expense. I've checked the cost information on the individual items used in the bill of materials, and changing them has absolutely no effect on the average cost. How can I get this amended without doing an inventory adjustment?
                      Let me jump in here

                      in the assembly BOM, the cost info you see has nothing to do with the build cost. so checking what it says on the assembly screen serves no purpose.

                      When you issue a build command, QB removes the items in the BOM from inventory.

                      When that happens, QB adds up the average cost of the items - average cost NOT the cost in the cost block of the item which is what you see in the BOM cost block.

                      So you have to check the items used in the assembly for average cost.

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                      • #12
                        I tried changing the cost of a couple of the items used in the assembly. It had no effect.

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                        • #13
                          The cost uses the purchase amount on bills, checks, and credit card charges.
                          It does not use the amount listed on the item in the item list.
                          Joe Williams
                          joewilliams@wavelinx.net
                          Piedmont, Ok

                          Comment


                          • #14
                            Originally posted by hgonzales View Post
                            I have two inventory assemblies that I have no idea what they are basing the average cost on. One has an actual cost of approximately $12K, but the average cost is over $300K. I don't want to do an adjustment to fix this because I don't want that vast discrepancy to be showing as an expense. I've checked the cost information on the individual items used in the bill of materials, and changing them has absolutely no effect on the average cost. How can I get this amended without doing an inventory adjustment?
                            first, you need to look at the detail of the inventory valuation of that assembly items. It will tell you the Quantity on Hand over a period, and more importantly, the average cost along with it. From there, you will know when the average cost went wrong.

                            second, I assume that it went wrong because of a build assembly. Then look at particular build assembly, carefully check the quantity of each component in the build of material, check the average cost of that component.
                            If the quantity was incorrect, simply correct the quantity.
                            If the average cost of the component was incorrect, open the detail of inventory valuation of the component to investigate why and when it went wrong.

                            I tried changing the cost of a couple of the items used in the assembly. It had no effect.
                            of course it has no effect. The cost on the cost block is just informational cost. QB doesn't use that cost to calculate any thing.

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