Before reading this article, we recommend familiarizing yourself with the basics of FIFO cost calculation method.
How Material Prices Are Determined in Production Cost Calculation
When calculating production costs, material prices are determined using the FIFO method from inflow transactions — operations that increase material inventory levels in storage.
In Controlata, there are six types of inflow transactions:
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Initial material creation
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Purchase
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Production (for products only)
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Positive stock adjustment
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Inventory audit with surplus
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Transfer between storage locations
Each inflow transaction calculates material prices differently. Let's examine each of these operations in detail and see where material prices come from.
Initial Material Creation
The price is entered manually when creating a material. If you want to change the price you specified when creating a material, you can do this by clicking on the “Material creation” line in the history of that material.
Purchase
In purchases, the material price is explicitly specified when creating them, and you can always change it by editing the purchase.
Production
This is relevant only if you use products as components in other products.
In production, the cost of manufactured products is calculated based on the total cost of that production run.
Positive Stock Adjustment
When adjusting material stock level upward, the price is taken from the material details at the time of the adjustment.
If you want to change the material cost for an adjustment, specify the desired price in the material details, then re-save the adjustment by clicking on that adjustment in the material history and pressing “Save.”
Inventory Audit with Surplus
Similar to an adjustment, the price is taken from the material details at the time of the audit.
If you want to change the material cost for an audit, specify the desired price in the material details, then re-save the audit by clicking “Edit” and then “Save.”
Transfer Between Storage Locations
When transferring material, it is removed from the first location, and the cost of the removed material is calculated using the FIFO method. The material is added to the second location at the same cost that was calculated when removing it from the first location, and this cost cannot be changed.
How to Set the Desired Material Price in Production
To do this, you need to change the price in the inflow transactions that we listed above.
There is also a quick way to change the material price in production cost calculation:
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Change the price in the material details.
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Note the current stock level.
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Adjust the material stock level to 0 (zero).
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Adjust the material stock level back to the actual value you just noted.
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Re-save the production by clicking “Edit” and then “Save.”
The material price in the production components will be updated.