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From Average Cost to Standard Cost: A Step-by-Step Guide to Changing Your Stock Item Valuation Method in Acumatica

This podcast details the challenges and solutions associated with changing stock item valuation methods in Acumatica from average cost to standard cost. 

Challenges

  • Inability to Manually Change Valuation Method: Acumatica won’t allow you to manually switch from average to standard costing if the stock item has any value in the warehouse. 
  • Fluctuating Purchase Costs: Average costing methods can lead to significant fluctuations in the purchase cost of stock items, which can make it difficult to accurately price items and manage inventory. 

Solution

Step 1: Full Inventory Count 

  • Before making any changes, perform a full inventory count to determine the on-hand quantities of each stock item for which you want to change the valuation method. 

Step 2: Adjustment Entry to Zero Out Stock 

  • Create a negative adjustment entry to bring the on-hand stock quantity to zero for all warehouses and locations. Export the necessary data from Acumatica to ensure accuracy. 

Step 3: Change Valuation Method to Standard 

  • Once the stock is zeroed out, use an import scenario in Acumatica to change the valuation method to “standard” for each stock item. Define the relevant GL accounts for variance posting and set the effective date for the change. 

Step 4: Adjustment Entry to Restore Stock 

  • Create a positive adjustment entry to restore the stock quantities to their original levels, ensuring the costing is now based on the standard cost method. 

Step 5: Reconciliation 

  • Reconcile the updated stock quantities and standard costs against the initial inventory count to verify the accuracy of the changes and address any discrepancies. 

Benefits

  • Improved Inventory Valuation and Management: Switching to standard costing can enhance the precision and reliability of inventory valuation. 
  • Simplified Pricing and Consistency: Standard costing helps establish consistent and predictable pricing for stock items. 
  • Cost Transparency: Provides greater transparency into the cost of goods sold, making it easier to submit accurate quotations to customers and maintain profitability. 

Contact Tayana Solutions at 678-910-2774 for assistance with Acumatica implementations, customizations, and support.