When I run the OM Sales Order report, why am I seeing $0 cost? Where does this cost come from?

| May 31, 2018
plumbline consulting

That depends, mostly upon what the valuation method of the inventory item is that is being added to a shipper.

When the item uses a Standard Cost valuation method (and when there is a Standard Cost set up on the Inventory Sites screen>Costs tab, it will use that Direct Standard Cost on the Shipper and on the Sales Journal. If the shipper and Sales Journal show a $0 cost, double check the Inventory Sites screen (10.255.00) > Costs tab to be sure the item has a Direct Standard Cost set up.

When the item uses a valuation method like Average Cost, it will use the Inventory Item’s Last Cost as found in the Inventory Sites screen (10.255.00) > Costs tab as a placeholder or estimate of the cost. The reason for this is that with an average cost valuation method, the average cost can fluctuate as items are received, so it’s like trying to hit a moving target. Dynamics SL uses the Last Cost of the item as a placeholder or estimate of the cost. Once the IN Issues batch is released, Dynamics SL will go back and update the shipper with the actual average cost.   If the Sales Journal is reprinted, it will also reflect the updated average cost.

Here is a scenario to illustrate this:

  1. Item is received with quantity of 10, at a cost of $75.00. A shipper is created and closed, but the sales journal isn’t run yet.
    1. The Last Cost is $75.00 and the Average Cost is $75.00.
    2. The shipper shows a cost of $75.00.
  2. A second receipt batch is entered for a quantity of 5, at a cost of $20.00 each.
    1. The new Last Cost is $75.00 and the new Average Cost is $56.67.
    2. A new shipper is created for this item and shows a cost of $20.00 (Last Cost).
  3. The sales journal is run for these two shippers and it uses the cost as shown below:
    Before the IN Issues batch is released, it shows these same costs of $20.00 and $75.00), which were the Last Costs when the items were added to a Shipper.

    However, after releasing, the correct average cost is used ($56.67):

    So if your Sales Journal shows a $0 cost on an item, check the following:

    1. What is the valuation method?
    2. If it’s Standard Cost, check the Inventory Sites (10.255.00) > Costs > Direct Standard Cost to be sure the item/site has a Direct Standard Cost set up.
    3. If it’s an Average Cost item, or other valuation method, check to be sure there is a Last Cost of something other than $0.

    Keep in mind that once the IN Issues batch is released, the correct cost, based on the valuation method will be updated on the shipper and Sales Journal.