update Stock to Nominal (Weighted Average Valuation)
The Weighted Average method of valuation gives you fine control over your Stock Valuation by enabling you to control, in an auditable way, exactly what Transactions are included in the Weighted Average Cost and Unit Value.
e.g. This enables you to value your Stock based on six month values, or on rolling values.
You can mark each type of Transaction to indicate whether or not it is to be included in the Valuation (see Stock Utilities).
You can use Weighted Average with all types of Stock, but if you are using the Sub Analysis feature, to enable you to hold a single Stock Cost, its use will improve the Stock Valuation options available to you.
The type of valuation to be used is selected in Stock Options.
Overview
If you are not using Sub Analysis then the Stock Valuation looks at the Stock record as a whole.
By calculating the Weighted Average based on inward Movements only, there will always be an Average Value (it will never be zero).
On choosing the Weighted Average option in Stock Options, this value is displayed on:
The main Stock record window,
The Quantity tab card on the Sub Analysis window. Stock Levels menu bar is disabled, and defaults to showing the Weighted Values Including Landed Costs, and Each (the Weighted Average Unit Price).
If you are using Sub Analysis, when you have set up the Sub Analysis defaults window and saved the defaults, a message is displayed.
"The recommended valuation method when using Sub Analysis and Landed Cost is Weighted Average. For a more detailed explanation please refer to your on line Help. Do you wish to change the default now?"
Clicking Yes, changes the Stock Valuation method to Weighted Average.
The Weighted Average Per Unit (WAPU) per Sub Analysis will be calculated as:
Total Value of Movements in to the Sub Analysis divided by Total Quantity moved in to the Sub Analysis.
If Weighted is not chosen as the default Method of Valuation, whatever has been chosen will be displayed instead of Weighted Average on the main Stock record.
The Weighted Average incorporates any relevant Landed Costs, but it can also be used with non Sub Analysis Stock items.
If you are using Sub Analysis, the Physical drill down on the Quantity tab card in the Sub Analysis window shows the Landed Costs only, (to calculate the moving average value of the Stock item).
If you are not using Sub Analysis, the Transaction drill down on the main Stock record can show the Weighted Average.
The Landed Cost element is incorporated into the main Stock Costs.
The Weighted Average value is stored so that if Stock quantities drop to 0, there is still an Average Value.
All reports and windows have the option to include the Weighted Average.
Choosing Weighted as the default Method of Valuation would mean that the Weighted Average would be displayed as the value to use in reports as well as on the Stock record Valuation window.
If Update Stock to Nominal is being used, adjustments made to correct differences between Order value and Invoice value are taken into account in the Weighted Average valuation. The Value of Inward Movement can absorb these adjustments.
Weighted Average Valuation
This default Method of Valuation is selected in Stock Options.
If the method chosen is the Weighted average and Sub Analysis has been enabled, the Physical drill down on the Quantity tab card will summarise the Landed Costs as transactions for each Sub Analysis.
The Average Cost per item (including Landed Costs) is generated by dividing the total Value of Movements in by the total Quantity moved in.
This average is displayed on the Quantity tab card of the Sub Analysis window as an Each value.
The Each value is rounded to the required number of decimal places.
As the number of Movements in grows, this Average Cost will become the Weighted Average.
The reason for only using the Movements in is so that as the quantity returns to zero you do not lose the Weighted Average Value.
The total Weighted Value (displayed alongside the Each value) is calculated from the un-rounded Each value multiplied by the quantity. If the calculation was rounded at each stage, it is possible that the value could be under or over-stated.
The Values including Landed Cost menu is locked and disabled; this is because the Weighted value must include Landed Costs if they exist.
Sub Analysis Enquiry window
Landed Cost/Physical on the Quantity tab card will open the Sub Analysis Enquiry window.
On the right hand side of the Enquiry window, there are menu options view Home Value or Weighted Home Value or 2nd Base Value.
If Weighted Home Value is selected, when the list is refreshed, only movements which have not been excluded from the weighted average calculations are shown.
(There are no currency transaction options available on the Sub Analysis enquiry window.)
When the Supplementary Information icon is selected, the left hand tab cards displayed at the bottom of the window will include a tab card for Landed Costs. This information refers to the currently selected Transaction as a whole.
The right hand tab cards are for the currently selected Detail line within the Transaction, when these are being displayed on the window.
For an introduction to using Enquiry windows see: Enquiry Windows
For more information on using the Enquiry window from a Stock Record see: Enquiries from Record windows.