Sample calculation of the amount of the Freight Adjustment or Discount that is applied to the average cost of items.
The system attempts to adjust the average cost of all items on the invoice.
For example:
If there are 5 units on hand with an existing average cost of $20.00 and then an invoice is entered for 8 units at $ 24.00, the average cost of the item will be increased to $22.4615.
5 @ $20.00 = $100.00
8 @ $24.00 = $192.00
Total of 13 units at $292.00 = average cost of $22.46
If the price warning percentage in the inventory file is 5%, then any changes to the average cost in excess of 5% would not be applied.
The maximum that could be applied in this case would be $14.59.
$22.46 x 1.05 = 23.583, the average cost will change $1.123 for each unit available, 13 x $1.123 = $14.59
If an adjustment were made for $20.00, the system prompts with a non-applied amount of $5.41.
Additional Notes:
If a Freight Adj or Discount Adj is placed on an existing invoice, and the items are allocated and on a printed transfer, only the on-hand amount will be considered for the change in the average cost. Once an item is on a printed transfer, it has been priced.
If the Freight Adj or Discount Adj is placed on an existing invoice with multiple items, the average cost will be applied as above on the items with sufficient inventory. For those items with a quantity on hand of zero, the average cost of zero will not change.