FIFO Settings in the Update Coding Method

To be able to code FIFO transactions in the management accounting you must configure the following settings in the Update Coding Method procedure.

Please note! FIFO only works when using the price alternatives Booked calculation diff (WIP as the debit account) and Booked calculation diff (WIP as the credit account).

Inactivate the setting called Record price differences during invoice registration? under Accounts Payable under the Purchase tab in the Settings procedure. This setting should be inactivated since it is the invoice's actual price that will be coded by the management accounting.

The Price Calculation - Inventory Movements Procedure in the Calculation Difference Log

It is very important that the Price Calculation - Inventory Movements procedure is activated. You should also inactivate the Final Reporting procedure in order for the WIP account to become correct when using FIFO. Otherwise, you will have double costs for the goods sold. The reason for this is that the Final Reporting procedure will "clear" the WIP account directly when the manufacturing order has reached status 9. The difference between the standard price and the recorded WIP value will be coded as a calculation difference. This will take place before you have calculated the final price. When using FIFO, you use the Price Calculation - Inventory Movements procedure that will "clear" the WIP value by coding the difference between the recorded WIP value and the standard price (preliminary price) in the finished stock, and not on the income statement as a calculation difference.

Update Coding Method

The Undo Reporting Procedure in the Inventory Log

Please remember to activate this procedure for the coding methods. Otherwise, these logs will cause red records in the posterior coding. The following price alternatives exist for FIFO in the inventory log:

• FIFO (M/S/P)
• FIFO + SO (P-parts)
• Only SO mark-up of FIFO (P-parts)
• FIFO M/S-parts excl. SO
• FIFO M/S-parts excl. SO, excl. SC
• Only SO mark-up of FIFO (M/S-parts)
• Only material portion of FIFO (M/S-parts)
• Only subc. portion of FIFO (M/S-parts)
• Only SC mark-up of FIFO (M/S-parts)
• Only cost of labor portion of FIFO (M/S-parts)

The Undo Reporting Procedure in the Manufacturing Order Log

Please remember to activate this procedure for the coding methods. Otherwise, these logs will cause red records in the posterior coding. No other changes have to be made for the manufacturing order log in the Update Coding Method procedure. This will work as before.

Coding the Cost of Goods Sold via the Invoice Log

Here you need to review the price alternatives. The following price alternatives exist for FIFO in the invoice log:

• FIFO (M/S/P)
• FIFO + SO (P-parts)
• Only SO mark-up of FIFO (P-parts)
• FIFO M/S-parts excl. SO
• FIFO M/S-parts excl. SO, excl. SC
• Only SO mark-up of FIFO (M/S-parts)
• Only material portion of FIFO (M/S-parts)
• Only subc. portion of FIFO (M/S-parts)
• Only SC mark-up of FIFO (M/S-parts)
• Only cost of labor portion of FIFO (M/S-parts)

Price Change Log

You do not have to use the price change log when working with FIFO. The inventory value and WIP List are based on the parts' final prices. A standard price change does not affect the inventory value. That is why the price change log should not be coded and entered into the general ledger.