Using Cost Levels — Exercises

IMPORTANT
It is extremely important that you set up and work within your own site to maintain your data integrity. If you work within any other site, you will compromise your own exercise data as well as the data of other students. Predictable exercise results require that your data be isolated in your own site.

Basic Data Setup

Condition Codes

Purpose: The purpose of this exercise verify that appropriate condition codes are set up for the main exercise.

Windows:
Part Basic Data/Condition Codes

  1. Open the Part Basic Data window.
  2. Click the Condition Codes tab. Populate the tab.
  3. Verify that the following condition codes are displayed, and enter them if they are not: NEW, USED 

General exercise for Condition Codes

Main Exercises

Purpose: The purpose of this lesson is to show you how to set up purchased inventory parts that uses different cost levels and analyze the effects of the different cost levels.

Using Weighted Average per Condition

Purpose: The purpose of this exercise is to create purchase inventory part records with the correct parameters for tracking the weighted average per condition and to analyze the effects of this set up.

Windows:
Inventory Part
Part
Supplier for Purchase Part
Purchase Order
Register Purchase Order Arrivals
Inventory Transaction History
Issue Inventory Part

  1. Open the Inventory Part window and create part no XX99-020, Generator (replacing XX with your initials)
  2. Right-click, then click Part Catalog. Set the serial tracking parameters and enable condition codes for the part.
  3. Return to the Inventory Part window, re-populate the part no and click the Misc Part Info tab.
  4. Clear the Negative On Hand Allowed check box.
  5. In the Inventory Valuation Method list, select Weighted Average.
  6. In the Inventory Part Cost Level list, select Cost per Condition.
  7. Right-click, then click Supplier For Purchase Part and connect the part to a supplier.
     
  8. Open the Purchase Order window and enter an order header for the supplier used in step 8.
  9. Create three lines for the part as described in the table below and release the order.
    Line No. Part Condition Quantity Price per Qty
    1 XX99-020 - Generator

    NEW

    		 1 3000
    2 XX99-020 - Generator

    NEW

    		 1 3500
    3 XX99-020 - Generator

    USED

    		 1 470
  10. Open the Register Purchase Order Arrivals window, query for your order and receive the first line into a picking location. Enter a serial no for the part.
  11. Return to the Inventory Part window re-populate the part no and click the Costs tab. Analyze the values in the table. Are there any new lines and/or has the old lines changed? Open Inventory Transaction History, query for your part and analyze the values.
  12. Repeat step 10 and 11 for the second line.
  13. Repeat step 10 and 11 for the third line.
  14. Open the Issue Inventory Part window and issue the line with condition USED.
  15. Return to the Inventory Part window re-populate the part no and click the Costs tab. Analyze the values in the table. What has changed? Open Inventory Transaction History, query for your part and analyze the values.

Using Standard Cost per Lot Batch

Purpose: The purpose of this exercise is to create purchase inventory part records with the correct parameters for tracking the standard cost per lot batch and to analyze the effects of this set up.

Windows:
Inventory Part
Part
Supplier for Purchase Part
Purchase Order
Register Purchase Order Arrivals
Inventory Transaction History
Issue Inventory Part

  1. Open the Inventory Part window and create part no XX99-021, Gas Spring (replacing XX with your initials)
  2. Right-click, then click Part Catalog. In the Lot/Batch Tracking list, select Lot Tracking.
  3. Return to the Inventory Part window re-populate the part no and click the Misc Part Info tab.
  4. In the Inventory Valuation Method list, select Standard Cost.
  5. In the Inventory Part Cost Level list, select Cost per Lot Batch.
  6. Right-click, then click Supplier For Purchase Part and connect the part to a supplier.
     
  7. Open the Purchase Order window and enter an order header for the supplier used in step 8.
  8. Create three lines for the part as described in the table below and release the order.
    Line No. Part Quantity Price per Qty Lot Batch No at Receipt
    1 XX99-021 - Gas Spring 10 3000

    GS1
    2 XX99-021 - Gas Spring 10

     3250

    GS1
    3 XX99-021 - Gas Spring 10

    3500

    GS2
  9. Open the Register Purchase Order Arrivals window, query for your order and receive the first line into a picking location. Use the lot batch no as described in the table above.
  10. Return to the Inventory Part window re-populate the part no and click the Costs tab. Analyze the values in the table. Are there any new lines and/or has the old lines changed? Open Inventory Transaction History, query for your part and analyze the values.
  11. Repeat step 9 and 10 for the second line.
  12. Repeat step 9 and 10 for the third line.
  13. Open the Issue Inventory Part window and issue all parts with lot batch no GS2.
  14. Return to the Inventory Part window re-populate the part no and click the Costs tab. Analyze the values in the table. What has changed? Open Inventory Transaction History, query for your part and analyze the values.
     
  15. What would have happened if you where using Inventory Valuation Method weighted average instead of standard cost?

Manually Modify the Level Cost

Purpose: The purpose of this exercise is to show you how to manually modify the unit cost for a specific cost level. This exercise requires that the Using Weighted Average per Condition exercise has been completed.

Windows:
Inventory Part/Costs
Inventory Transaction History

  1. Open the Inventory Part window, query for part your XX99-020 - Generator and click the Costs tab.
  2. View the changed inventory values.
  3. Select one of the lines with condition new, right-click then click Modify Level Cost Details. T
  4. In the Modify Level Cost Details dialog window that opens, enter a value in the New Cost field and click OK.
  5. Re-populate the record in the Inventory Part window and analyze the values.
  6. Open Inventory Transaction History, query for your part and analyze the values.