Product Cost Management

Inventory Management and Cost Principles:
Accounting rules allow you to move the cost from inventory to the cost of goods sold by using one of three cost flows:
· First In, First Out (FIFO)
· Last In, First Out (LIFO)
· Average

We have chosen in Land.db to follow the average cost model since tracking quantities applied within a crop year in the FIFO and LIFO require matching product quantities to product quantity applications. This creates an additional burden to the user in making sure that invoices are entered before the product is applied to the field.

Average Cost
In Land.db, total product quantities and total product cost are constrained by a crop year. When a new crop year begins the average cost of a product starts again. Product cost can change rapidly during a crop year or can have a flat price all year. The goal in Land.db is to know total quantities of a product purchased, total product cost and the total product applied.

Specific Cost
In Land.db 12 we also give the user the option to use a specific price that is for that product for that record. This allows a user to quickly enter a price knowing later that average cost or an associated invoice price can be pulled for that product.

Invoice Cost
The user can also use an invoice price that is associated to that product for that application. This allows the user to create an application from an invoice. The application will pull the average cost into the record but when the invoice is the “source record” for that application, that invoice price can also be pulled and used in a FIFO model.

Reports and Applied Products Tab
Within our reports, we give the user the ability to pull whatever price option they want. Average cost, Specific or Invoice. On the Applied product tab, you have the option of selecting all three and the default value is average cost.

We encourage our users to always consider managing inventory through average cost since it allows the management of one variable: Quantity. When you go the route of trying to manage actual cost or FIFO, you now have two variables to track, quantity and price. You have to define when one quantity of a product at a cost switched to the next quantity at another cost.

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Syngenta Digital Support
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