Costing is done on a warehouse by warehouse basis
You are right …a single item can have multiple cost based on warehouse.
This is a good thing generally speaking as it allows different SBUs to manage item costs separately from each other if need be
Actually, it’s possible. Many standard ERPs allow you to choose the valuation area for stock at configuration time. Company level or warehouse level. Some even track two at the same time and allow you so specify a custom valuation level.
Agreed; I’ve worked on ERPs with this level of costing flexibility.
@YGhoul is right; sometimes a business does not want separate costs per Warehouse.
Buy coffee cups for 5 each in Warehouse B.
Buy coffee cups for 10 each in Warehouse B.
Write a sales order using either Warehouse. And expect Cost to be 7.50 always.
It’s a reasonable request.
True. In that case the valuation level to be set at configuration time is company as opposed to warehouse.
Fahad2
June 6, 2020, 1:11pm
10
Is there such a configuration. I believe by default its set at Warehouse Level.
YGhoul
June 9, 2020, 11:54pm
11
Unfortunately, it is only on warehouse level.
“I think this is a big problem and should be solved soon”
Possibly this request relates to or is close to your concern?
opened 06:37PM - 04 Mar 19 UTC
closed 06:00PM - 14 Aug 23 UTC
manufacturing
to-validate
stock
Specifc Problems:
* The Valuation rate of new inventory on Purhcase Receipt sto… ck entry should be the actual rate these items were purchased at on the PO plus any supplied raw materials at their rates on the Subcontracting Stock Entry.
* Work in Progress inventory balances on the Balance Sheet should be cleared out as Purchase Receipt(s) are processed
Here's the steps I've taken (and I've done this about 15 times to make sure the results are consistent):
Vendor V is a production and fulfillment house. They produce Item X (workbooks) which we order via Purchase Order (“PO”) which they inventory and then fulfill individual orders to our clients for us.
Hierarchy:
* Company (Us) – FIFO configured
* Vendor V
* Warehouse WIP (Work in Progress) (GL1305)
* Warehouse W (GL1300)
* Product X – Valuation $13.54 each
* BOM - Valuation $13.54 each
* Item B - Valuation $3.61 each (subcontracting set up and supplied by us and pulled from existing stock in inventory when we issue a PO)
* Item G - Valuation $9.93 each (produced by Vendor V when we issue a PO)
For simplicity I am creating a single unit. I create a Purchase Order for 1 Item X @ $9.93 each from Vendor V. I select YES under the Supply Raw Materials option. When I save the record, it shows the BOM exploded parts correctly. I set Target Warehouse to Warehouse W since they will house the inventory for us.
Item X has a BOM associated with it consisting of Item B (which we supply out of our inventory in Warehouse W at Vendor V’s location) & Item G (which are produced based on the PO). My assumption, based on my limited understanding of ERPNext, is that the PO should show a unit price of $9.93 each since we are supplying $3.61 each in the form of Item B. The vendor is manufacturing Item G and that is the only amount we wish to show on the PO.
I then submit the PO and create a stock transfer from the PO record using the button on the form. I move 1 Item B from Warehouse W to Warehouse WIP.
* All of the GL entries and stock ledger entries are correct to this point.
Next, we wait for 1 Item X to be “delivered” to Warehouse W. I create a Purchase Receipt from the Make | Receipt Receipt PO dropdown. Warehouse W is selected on the Set Accepted Warehouse field. Raw Materials Supplied is set to YES. Supplier Warehouse is set to Warehouse WIP. 1 Item B’s are listed in the Raw Materials Supplied sub-table. The cost for these items is showing as $3.61 each.
* When I receive the inventory, the stock ledger shows 1 Item X added to Warehouse W (correct) and a second entry for -1 Item B out of Warehouse WIP (correct). It also shows an accounting entry crediting GL1300 and debiting GL1305 for $3.61 (correct). However the Valuation Rate is claculated as the average of (existing_stock_ valuation + the_new_stock_valuation) / total_units_including_new_stock even though we are set to FIFO
* When I check the accounting ledger, I see $9.93 debiting Inventory (GL 300, possibly correct – see next paragraph) and crediting $9.93 to “Stock Received but not Billed” (GL2020 – a payable, correct).
* What I don’t see is this journal entry moving the WIP materials from GL1305 (Work in Progress) to GL1300 (Inventory):
| Account | Debit | Credit
|-----------------------------|-------|-------|
| GL1305 (Work in Progress) | | $3.61 |
| GL1300 (Inventory) | $3.61 | |
* This journal entry would clear out the balance sheet Work in Progress account. Or possibly this journal entry:
| Account | Debit | Credit
|----------------------------------------|--------|-------|
GL1305 (Work in Progress) | | $3.61 |
GL1300 (Inventory) | $13.54 |
GL2020 (Stock Received but not Billed) | | $9.93 |
* This journal entry would clear out the balance sheet Work in Progress account and be much clearer in the long run since the subcontracting activity and supplying of the aw materials is documented in the Purchase Receipt transaction.
What I see on the balance sheet afterwards is a balance in the Warehouse WIP (GL1305) for the subcontracted items. They are not moved into the target warehouse at all. If a do the next step and create a Purchase Invoice, the money moves from GL2020 (Stock Received but not Billed) to GL2000 (Account Payable, correct) but the GL1305 is never transferred. I would not want to have to remember to do a journal entry after each receipt.
Here's this content in MS Word formatting:
[Subcontracted Purchase Order Issuee.docx](https://github.com/frappe/erpnext/files/2927767/Subcontracted.Purchase.Order.Issuee.docx)
If so upvote it with your comments, or else check here and add issue so that your request is on record.
Note several Manufacturing PRs to do with POs with this release:
#20135
Dynamic filters for dimensions in the budget variance report. #19973
Purchase Receipt and Purchase Invoice is not mandatory for an existing asset. 19980
Allowed multiple Landed Cost Vouchers against a Purchase Receipt / Purchase Invoice. #20058
Rounding adjustment while both inclusive tax and additional discount amount are applied. #20078
Fixed an error while doing payment reconciliation for party type Employee. #20088
Show Cl…
1 Like
I am adding it to our stock module roadmap, it can be configurable.
4 Likes
Fahad2
June 14, 2020, 12:56pm
14
Hi
Are u adding the option of “Average Cost at Company Level or Warehouse Level”
Thanks.
At setup, you should be able to choose a “organisational level for valuation”. Options should at least be Company and Warehouse with possibility to even value at the level of a custom dimension. Different types of businesses tend towards valuation at different organisational levels. Manufacturers usually at warehouse level. Retailers usually at company level. Not always clear-cut.
1 Like
Hii
YGhoul
July 22, 2022, 12:49am
18
Although we solved this problem by modifying the core code, we still believe that the moving average should be calculated at the parent warehouse level, I hope that this option can be added in the coming version, and I am willing to assist.
Hello @nabinhait is this added in ERPNext. Thanks
can you share the changes made to make it company wise average? thanks.
YGhoul
September 30, 2022, 1:11am
21
You need to do modification in the core python files
Anyone here who has info if the company level valuation has been added into the code already? And on what build it is available?
may i ask if in the version 14, unit cost is incorporated in the company level ? it was in the warehouse level as of now, pls update?
YGhoul
November 4, 2022, 10:25pm
25
Unfortunately no, still on warehouse level