Managing Parts – 2 of 3


In this second of the three part series about Managing Parts, we will review setting up cost rules to ensure your Work Order Material Costs are calculating as intended.

The cost rule that determines the cost that will be applied when parts are used on a work order is specified on the Inventory Details Tab. The default setting for new inventory items uses the standard cost rule (S). This rule applies the “fixed” cost specified on the Inventory Details Page to ALL work orders that use this material:

 

In the example shown above, the item has been specified to use the Standard Cost Rule and record each usage (actual material) at $75.00. This amount will apply to all work order actual material costs, regardless of any subsequent purchasing activity that might indicate a different cost. That is, this method does not utilize any cost history calculated from purchases recorded in the Purchasing Module.

If you are maintaining purchase history in Maintenance Connection (recording purchase orders and receipts), you can use a cost rule that calculates the cost based on purchasing activity. The two most common rules used are “Last Cost” and “Average Cost.” The “Last Cost Rule” will apply the last cost recorded on a completed purchase order for this item, whereas the “Average Cost Rule” will apply the average cost of all completed purchase orders. To verify the cost that will be used, Maintenance Connection displays the values calculated from purchase order history directly below the cost rule on the Inventory Items Details Page. In the following example, you can see that the last purchase recorded in the system was for a cost of $72.00, and the average cost of all purchases recorded in the system was $77.50.

 

If you selected the “L-Last Cost” Rule, actual material recorded for this item would have a rate of $72.00. If the rule was changed to “A-Average Cost”, $77.50 would be applied to actual material records. These values will be updated each time a new purchase order is issued (and completed) for this item.

Tips:

  • Be sure to click the “Apply to all Stock Rooms” indicator to ensure that this cost rule is applied to all stock rooms.
  • When you add “actual material” to a work order it always shows the “standard cost” until the work order is saved. Once the work order is saved, the correct “last” or “average” cost will show.
  • If you would like to convert to a method that determines costs based on purchase history, contact Customer Support to obtain and run scripts to switch over your data.  

Note: The Cost Rule lookup also includes options for LIFO and FIFO (“last in first out” and “first in first out”). It is not recommended that customers use these options as they require a very strict sequence of entry/events.

Coming Postings…

Next week, in our third blog in this series on Managing Parts, we will review the Inventory Count feature.

Advertisements

No comments yet... Be the first to leave a reply!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: