# Scenario description:

You want to evaluate your products receipts with planned production cost. You wish to have the materials price for the planned cost set as Moving average.

# Set-UP

First we have the following setting in the configuration wizard:

Production Planned Cost

Then we have a simple Item Structure like the following one:

on Both items father and child the valuation method on item level is moving average

# Process description

First We do an AP invoice for the component Moving average02. Once this is done, we have the following valuation for the component

Then we create a new work order

We do a first time receipt with partial receipt of one product out of 5

We get the following result:

The material issue at the cost of 10 which is correct because of the previous AP invoice and the receipt of the final product with the following cost

So the cost reflect the cost of the material of the subcomponent plus the labor and other surcharges

Now we receive a second AP invoice for the component with a significant variation of the cost

So the moving average of the component now is 15.26

On the same work order that is still open, we do a second time receipt with another partial receipt of on item out of the remaining 4

As you can see the issue is considering the new moving average of the component with the related increase of the planned cost for the product receipt.

Now let’s explain the cost of the receipt at 21.47

On the first half of the sheet the system is showing the current valuation for the receipt of 2 pieces of the products. The planned cost is based on the new moving average of the component (due to the second ap invoice we have booked) and to the labor, machine and surcharge costs. In this case, we have a cost for the components of 30.52 (15.26 multiplied by the 2 components issued) + the labor, machine and surcharges for a total of 32.423.

In the middle part of the sheet the system is instead showing the costs booked on this work order PRIOR to the current receipt. In this case, we have an issue of one component for 10.00 + labor, machine and surcharges cost for a total of 0.946. This costs are DISCOUNTED by beas from the current receipt as they have already been booked on the product.

So we get to the third part of the sheet that shows the final calculated planned cost for the current receipt. And in this case it is: (30.52 – 10) = 20.52 material costs + (1,833330 – 0,916665) = 0,916665 for labor costs + (0,073333 - 0,036666) = 0,036667 for the surcharges for a final receipt cost of 20,52 + 0,916665 + 0,036667 = 21,473332

# 4. Final notes

If you wish to review your work order current costs and see how the moving average of a component has been fluctuating and what is the difference to the current moving average cost of that component, you can check these 2 additional parameters of the configuration wizard:

- With the parameter “Valuation to” set to “Price from receipt” you will be able to see the post calculation of the work order with the exact moving average cost that was on the component at the time it has been issued
- With the parameter “Valuate planned costs to” set to “Item valuation method” you will be able to see the planned costs of the work order in the post calculation screen of the work order with the current moving average cost on the component