Trace and Understand COGS from Sales Invoices
Overview
GoldFinch's FIFO Costing method provides precise costing calculations, enabling the Cost of Goods Sold (COGS) on Sales Invoices to be automatically adjusted when Purchase Invoices or Work Orders are posted after the Sales Shipment.
Each layer of COGS is directly traceable to the inbound inventory, and COGS adjustments occur automatically through the Adjust Cost routine whenever the inbound inventory cost is updated. Additionally, the Inventory Revaluation Journal allows for corrections at any time, with all subsequent outbound COGS automatically updated.
All cost adjustments are posted using historical dates. If the historical posting date falls within a closed accounting period, the system defaults to the "Allow Posting From" date set in Company Setup.
Key Features
Unit Cost Updates: The Unit Cost on Sales Invoice lines is updated automatically as cost adjustments are made.
Viewing Cost Entries in Sales Invoices
To view cost entries for a Sales Invoice:
Navigate to the Sales Invoice Line.
Go to the Cost Entries (CE) section.
From the Cost Entries section, navigate to the Item Ledger Entry (ILE), which represents the outbound inventory.
From the outbound ILE, navigate to the Inbound ILE using the Item Application Entries (IAE) related list.
An outbound ILE can reference multiple inbound ILEs, and the IAE table shows the quantity used from each inbound ILE.
Each inbound ILE can have multiple cost entries, categorized as Expected, Invoiced, or Adjustments.
Cost Types
Expected Cost:
Purchase Items: When the Warehouse Receipt is posted, a cost entry (CE) with an Expected Cost is created, derived from the Purchase Order.
Work Order Items: When the output is posted for a Work Order, a CE with an Expected Cost is generated, based on the Work Order.
Invoiced Cost:
Purchase Items: When the Purchase Invoice is posted, a CE with the Invoiced Cost and a negative Expected Cost is created.
Work Order Items: Upon finishing the Work Order, a CE with the Invoiced Cost and a negative Expected Cost is posted.
Adjustments:
If the quantity represented by the inbound ILE has already been consumed, the Pending Cost Adjustment box will be checked.
The nightly Adjust Cost routine will process all inbound ILEs with pending cost adjustments to update the COGS of the subsequent outbound ILEs.
Cost Calculation
Total Cost = Expected Cost + Invoiced Cost
Unit Cost = Total Cost / Quantity
All inbound ILEs linked to an outbound ILE are used to calculate the COGS for the Sales Invoice Line.
By following these steps and understanding the different cost types, GoldFinch ensures that all cost adjustments are accurately tracked, calculated, and posted. This leads to real-time insights into profitability and ensures that your financial records reflect the correct cost at each transaction step.