IC12 - Average Cost

Average unit cost is calculated for inventory items. It's recalculated every time there are receipts for an item.

Current SOH Value + Receipt Value
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Current SOH Qty + Receipt Qty

Are you sure that you're seeing the average cost on the PO line? On PO01.4 the only choices for cost source are Contract Order, Catalogs & Quotes, Blanket Order, Last Cost, Last PO, and IC No Charge Flag. If you check the cost source on the PO line and it doesn't say Contract there may be several reasons-

-your agreement participants aren't set up correctly
-the vendor set in IC12.2 is not the same as the vendor for the agreement
-the item/vendor cat is not setup on the agreement
-the agreement/line is on hold

The cost source on the PO line is "Last Cost". In PO01.4, Last Cost has a value of '2'. Contract is "1".

Not sure then why this would pull last cost over Contract.

I noticed we have 2 IC12's. One for DISTR and one for LUM.

The one for LUM shows 0.00 for Average Cost. The one for Distr shows the incorrect price (does not match the PO25.6 )

See attached...

Average cost will also zero out when SOH hits zero. This is what I would guess the issue with LUM is. Distr is averaging over time and is likely pulling more old data and skewing the cost. To "reset" we create an IC24 and issue it all out and then IC24 and issue it all back in at the correct cost. The difference then sits on the over/short GL account. We do this whenever the difference between IC12 and PO25.6 is greater than 5%.

IC47 will show you the cost at the time of transaction and should help you narrow down when it started going sideways.

Just to add to what Jon said - the average cost also fluctuates whenever an invoice is applied to the PO line.

Right, if the invoice cost is different from the PO cost a cost adjustment (CA) will be applied. Thanks Michelle.

So, the issue with the PO line showing last cost- Have you verified that the Ship-to on the PO line is a participant on the agreement? Either it has to be specifically identified or PO25.3 is completely blank (wide open- all locations are participants).

Does anyone have a report that can tell if an item's average cost has a 'significant' change ?

I have a report in our BI report center that runs an SQL to tell you the difference between average cost and "true" cost. I can share this piece - kvila@mhs.net (our firewall won't let me add attachments here). If the difference/avg-cost > .1 (so when it's over 10%) it flags it as non-compliant.

Thanks Kat, I sent you an email, for the report.

Appreciate it!

... the post went away as I got here but RQC pulls price based on PO01.4 Cost Default Tab.

First it will ask if you want to pull Vendor then price or price then vendor (Which came first - the chicken or the egg? ) We have Vendor, Vendor Item, Cost - find the right part number and the cost should be easy to find on PO28.

I didn't get to see the screenshots - but if RQC UOM = PO25.6 UOM with our setup - it's pulling from PO25.6. If the UOMs don't match and the PO25.1 UOM Must Match is N (No) then Lawson is doing math on the PO25.6 pricing to calculate the cost in RQC's UOM.

Greetings!  The above thread has been extremeely eye-opening.  However my team and I cannot figure out where the RQC Cost comes from and it is throwing off our departmental budgets.  RQC shows a cost that is not reflective of the Last Received Cost in IC12.  As a result our requesting locations are being charged a different amount than what they are supposed to be charged for items ordered.  We would be grateful for anyone's assistance.    

Thank you Kat V. for your prompt reply from yesterday!

Yeah - check out your PO01.4 and move Last Cost up the field a bit in test and see what happens.