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Inventory Projects and Abbreviations

For both costing/valuation and planning purposes, the Costpoint project ID is the key factor in distinguishing inventory.

Within a given project, you can establish inventory abbreviations to provide further breakdown of inventory detail for accounting purposes. To use the Costpoint Material Management functions properly, put careful thought into the organization and setup of your inventory projects and abbreviations.

Inventory Projects

All inventory must be assigned to a project in order to be tracked by Costpoint; you can do this on the Manage Inventory Projects screen. The project must already exist in the Project Master Basic Info table in Costpoint Project Setup, and must then be added to the Inventory Projects table. The types of projects can be any of those allowed in Costpoint Project Setup, including the common inventory type, which allows you to set up a "pseudo-project" for all company-owned inventory not allocated to another direct or indirect project.

Inventory Project Costing Options

On the Configure Inventory Settings screen, you can specify how inventory costs are to be tracked and valued at the project level. You can set up defaults on the Configure Inventory Settings screen, but each project can have its own unique costing characteristics and controls.

Cost Types

You can specify how inventory is to be valued/costed for general ledger purposes. The current cost type available is Average Actual.

Under the Average Actual method, the cost of each part within a project is based on the actual costs incurred when purchasing or producing that unit. Every time an item is received—via purchase order receipt, miscellaneous receipt, manufacturing order receipt, customer return, adjustment, negative issue, or inventory transfer—Costpoint automatically recalculates the weighted average unit cost for that part/project combination. The new weighted average is based on the quantity and average unit cost of existing inventory compared to the new received quantity and its cost. All inventory issues, negative adjustments, and so on are done at the average cost, unless overridden by you or a payback transfer.

For example, Part ABC in project 101.01 has a quantity of 20 units at an average unit cost of $10. A new receipt of 10 units at $16 each is placed into that project's inventory. The new average actual cost is $12.

((20 units * $10/unit) + (10 units * $16/unit))/ 30 units.

Issues done before the receipt are costed at $10 per unit. Issues done after the receipt are costed at $12 per unit.

Project/Item Costs

You can maintain multiple costs at the project/item level, even if they are not used for inventory valuation purposes. These costs include average actual (see above for update process), last (updated every time an item is received on a purchase order or maintenance order), standard (updated manually), and reference (updated manually).

Roll-Up Options

You can use this option to control the movement of inventory costs within a project hierarchy during issue transactions (including issues to project/account/orgs, purchase orders, manufacturing orders and sales orders). Costs are always posted when inventory is issued between projects with different top-level project IDs (if allowed).

On the Configure Inventory Settings screen, there are three options available when the issue is between projects with the same top-level project ID. These are defaults for new inventory projects. You can also specify these options in the Cost Roll-Up group box on the Configure Inventory Projects screen for a specific project.

Field Description
Roll-Up All Parts

If you select this method on the from inventory abbreviation's project, costs are posted to the to project, accounts, and organizations on an issue. This is the Roll-Up All Parts Costs selection on the Configure Inventory Projects screen.

Roll-Up Buy Parts Only

If you select this method on the from inventory abbreviation's project, costs are posted to the to project if the from inventory abbreviation has an inventory type of Raw Materials. If the from inventory abbreviation has an inventory type of Finished Goods, the costs are not rolled up to the to project, accounts, and organizations. This is the Roll-Up Buy Parts Cost selection on the Manage Inventory Projects screen.

No Roll-Up

When this method is selected on the from inventory abbreviation's project, the costs are not posted to the next project level. The issue is allowed, but the costs remain in the from inventory abbreviation's project, accounts, and organizations. This is the No Roll-Up selection on the Manage Inventory Projects screen.

Roll-Up Example

Raw material was purchased/vouchered to Raw Material WBS levels. All Raw Material WBS inventory abbreviations have an inventory type of Raw Materials.

Issue transactions A, B, C, and D will have their raw material costs posted to the Subassembly WBS levels if the Roll-Up All Parts or Roll-Up Buy Parts Only option is selected for their respective from projects. If the option is No Roll-Up, the cost is not posted to the subassembly WBS projects.

Issue transaction E will have its inventory costs posted to project 1 if the Roll-Up All Parts option is selected for project 1.01 or if the issue was from a 1.01 project inventory abbreviation with an inventory type of Raw Materials and project 1.01's roll-up option was Roll-Up Buy Parts Only. Any other combination would result in the costs not being posted to project 1.

Inventory Abbreviations

All inventory transaction and storage information will require an inventory abbreviation for accounting identification purposes. Inventory abbreviation, along with part number, revision, warehouse, and location, is one of the key data elements used by Costpoint for accurate inventory quantity and cost tracking. Use inventory abbreviations to record all the necessary project, account, and organization information with a single, short code containing up to six alphanumeric characters. This eliminates the need for material personnel to know and enter the larger accounting identifiers.

Inventory Account Types

You can specify how the inventory transactions are to be processed in the General Ledger by specifying an account type for each inventory abbreviation. There are three account types available. The first type, Assets, signifies that the items stored in a company's inventory are to be treated as asset items on the balance sheet. In contrast to Deltek System1, it is possible to have inventory items assigned to a project, but still treated as assets on the General Ledger. All accounts entered for an asset inventory abbreviation must have an account type of Asset. You cannot issue to an asset inventory abbreviation.

Inventory assigned to the second type, Expensed, will be expensed on the income statement when it is assigned or charged to that inventory abbreviation, and it will show up as cost to that inventory abbreviation's project. All accounts entered for these inventory abbreviations must be labor or non-labor expense accounts.

Use the third account type, GFM (Government Furnished Material), to track inventory parts, but not have them affect the General Ledger. The material will be assigned to a project and is usable for manufacturing or sales, but it will not show up on either the balance sheet or the income statement. GFM Inventory Abbreviations do not have any accounts/organizations tied to them.

Inventory Types

Inventory abbreviations can also be defined as Raw Materials or Finished Goods inventory types. Raw materials can have only purchased parts assigned to them and do not require work-in-process accounts and organizations. Finished goods can have all types of inventory parts assigned to them and WIP accounts and organizations are required. A default raw material inventory abbreviation can also be assigned for manufacturing order requirement purposes.

Inventory Abbreviation Accounts

Some, all, or none of the 10 account/organization combinations may be required for each inventory abbreviation, depending on the inventory account type and the inventory type specified.

The 10 account/organization combinations are as follows:

  • Direct Material
  • Direct Material Burden
  • Direct Labor
  • Direct Labor Burden
  • Direct Subcontract
  • Direct Subcontract Burden
  • Direct Miscellaneous 1
  • Direct Miscellaneous 1 Burden
  • Direct Miscellaneous 2
  • Direct Miscellaneous 2 Burden

Costpoint uses these accounts to properly allocate general ledger amounts generated by inventory transactions. Each cost element can have a different account/organization to allow Costpoint to properly allocate burden on the different cost elements.