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Cost Accounting

This setting offers some options for controlling the costing method used by Hansa when generating Nominal Ledger cost accounting transactions from the Sales Orders module.

Update GP at Invoicing
When creating Invoices from Orders, the Cost Price of each Item on the Invoice (and therefore its gross profit) can be taken from the Order or from the sum of the Cost Price and the Extra Cost from the Item record. If you wish to use the latter alternative, switch this check box on. This can be more accurate if you are routinely updating Items' Cost Prices from Purchase Orders or Goods Receipts since these are likely to occur after the entry of the Sales Order.

FIFO per Location
Hansa offers two methods by which FIFO schedules can be maintained.

In the first method, a single FIFO schedule is maintained, irrespective of the number of Locations. This method might be appropriate in situations where there are no Locations, or where the Locations represent different rooms or shelves in the same building. Therefore, when Items are removed from stock by Delivery or Invoice, the oldest Items are always removed, irrespective of the Location in which they are stored or specified on the Delivery or Invoice. Items can be moved from Location to Location by Stock Movements, but their value remains the same. To use this method, ensure this check box is switched off.

The second method is to maintain separate FIFO schedules for each Location. This method will be appropriate where the Locations represent separate buildings or warehouses. Therefore, when Items are removed from stock by Delivery or Invoice, the oldest Items in the specified Location are removed. Items can be moved from Location to Location by Stock Movements, and their value can be changed, perhaps to reflect the cost of the transfer. To use this method, ensure this check box is switched on.

It is recommended that this option be switched on if you will be using Hansa's Locations feature. It is also recommended that you either switch on the Require Location option or specify a Main Location (both in the Stock Settings setting in the Stock module). This will ensure that a Location is always specified when adding or removing stock.

Once a decision has been made as to whether the FIFO per Location feature is to be used, the state of this check box should not be changed. If the option is switched on or off once use of the Stock module has started, it is very likely that inaccuracies will be introduced to the FIFO schedule. If you do wish to change the status of this check box, it is recommended that you do so in a new database created at a convenient time such as the beginning of a financial year.

Object for Stock Account
When approving Deliveries, any Objects specified on flip E will be assigned to the debit posting when a Nominal Ledger Transaction is generated. Check this box if you would like them assigned to the credit posting as well.

Use Item Groups for Cost Accounts
With this option selected, Hansa will give priority to the Accounts entered for each Item Group when Nominal Ledger Transactions are generated from a Delivery or Goods Receipt.

If this option is in use, it is recommended that all Stocked Items belong to Item Groups and that all Item Groups have Cost and Stock Accounts specified.

This option does not affect the choice of Cost Model.

Use Components Cost Accounts
When a Structured Item is included in an outward cost accounting transaction created from an Invoice, this option controls whether the Accounts and values are taken from the Structured Item itself or from its components.

This choice is most relevant if the Cost Model, Invoice is set to Cost Price. If a FIFO or Weighted Average Cost Model is being used, this option should be on because FIFO and Weighted Average values do not apply to Structured Items (assembled Items that are built the moment they are delivered).

If this option is off, be sure to include Cost Prices for all your Structured Items. This means that the Show Components on Documents option in your Structured Items should also be off.

When a Structured Item is included in an outward cost accounting transaction created from a Delivery, the only available Cost Model options are FIFO or Weighted Average. In that situation, therefore, this check box is always treated as being on.

Cost Price for Serial No
When a Serial Numbered Item is sold, its Serial Number has to be entered to the Invoice or Delivery manually: a Serial Number is not selected automatically. Hansa offers two methods by which such a sale can affect your stock valuation.

In the first method, Cost Prices are independent of Serial Numbers. When the Invoice or Delivery is approved, the stock valuation is adjusted on a FIFO basis, and, if you are using cost accounting, the value of the cost accounting transaction will also be calculated on a FIFO basis. In other words, the Item with the oldest Cost Price will be removed from stock. This will happen irrespective of whether the Serial Number chosen is the oldest one. To use this method, ensure this check box is switched off.

The second method links Cost Prices and Serial Numbers. When the Invoice or Delivery is approved, the Cost Price of the chosen Serial Number is deducted from the stock valuation, and this will be the value of any cost accounting transaction. This will not necessarily be the oldest Cost Price and thus there is a departure from the FIFO principle. To use this method, ensure this check box is switched on.

This method is recommended in situations where stock can occasionally be purchased at special prices. An example might be the purchase of Items at special rates for sale to educational establishments or for demonstration purposes. When demonstration stock is moved from stock to showroom or from showroom to showroom using Stock Movements (possibly in combination with Internal Orders), this method ensures that the special demonstration price remains connected to the Serial Number in question.

Once a decision has been made as to whether Cost Prices and Serial Numbers are to be linked, the state of this check box should not be changed. If the option is switched on or off once use of the Stock module has started, it is very likely that inaccuracies will be introduced to the FIFO schedule. If you do wish to change the status of this check box, it is recommended that you do so in a new database created at a convenient time such as the beginning of a financial year.

Separate Transaction rows per Item
If a goods in or goods out transaction contains several Items that use the same Cost, Purchase Control and/or Stock Account, the resulting Nominal Ledger Transaction can contain separate double-sided postings for each Item, or a single accumulated posting. Check this box to use the first method.