Changing to Estimated Average Cost

It is best to wait until month end to change an Inventory Department to an Estimated Average Cost department. To make the change, do the following:

1. Edit the desired Departments to change the posting to Estimated Average Cost. This option is found on the G/L Posting tab at Accounting / Setup / Inventory Departments. Change the Compute Invoice Cost By option to Estimated Average.
2. Edit each Product in the Departments changed in Step 1 and update the Estimated Average Cost to a reasonable cost. This cost should be close to or the same as the current average cost. These edits can only be done at Hub / Utilities / Edit Product Pricing.

Considerations

• If entering Purchase Orders with a cost, that cost will flow through to the Purchase Receipt when the Purchase Order is referenced. This makes the process faster and more efficient, as well as reduces the risk of mistakes.
• Whether or not Purchase Orders are used, Purchase Receipts must be used, as this is where the Estimated Average Cost is updated. If the Purchase Receipt step is skipped, the Estimated Average Cost figures will be incorrect.