1099094 - Inventory Audit Report Shows Cumulative Value even with Zero Qty

Symptom

In the Iventory Audit Report generated for a specific warehouse a non-zero value is shown in the Cumulative Value column even if the item does not have quantity.

Cause

Consulting

Solution

The Manage Item Cost per Warehouse setting in the Administration → System Initialization → Company Details → Basic Initialization tab determines the information displayed in the Inventory Audit Report.

'Manage Item Cost per Warehouse' is selected.

• If this option is selected, each warehouse defined in SAP Business One maintains its own cost. This warehouse cost is calculated whenever there is a movement of the item in the specific warehouse.
• When stocks are issued, the item cost will be from the specific warehouse where the stocks are issued.
• The Inventory Audit Report should be viewed per warehouse in order to determine the accurate valuation of the item. The option Group by Warehouse can be used for this purpose.

'Manage Item Cost per Warehouse' is NOT selected. 

• If this option is not selected, a single cost is maintained for the item per company. This cost is determined by the movement of the item within all warehouses.
• When stocks are issued, the single item cost determined on the company level will be used.
• When the item cost is calculated per company, a stock value may remain in a warehouse which has zero quantity. However, since the cost is managed across all warehouses this is ok, as long as there is an overall positive quantity.
• If the valuation of the item is required, the Inventory Audit Report should be run for all warehouses and not for a specific warehouse. If the report is viewed per warehouse it may not provide an accurate cumulative value of the stock.
• If only the quantity in a specific warehouse needs to be checked then the report can be run per warehouse.

Example:

1. Create new item with standard price 10 in all warehouses, since price is managed per company and not per warehouse.
2. Create goods receipt for this item to two warehouses - quantity 10 to warehouse 01 and quantity 10 to warehouse 02.
3. Create material revaluation, select warehouse 01 (only one warehouse can be selected for posting purposes), and change the price from 10 to 5.
4. Create goods issue from warehouse 02 with issued quantity 10.
5. Run the audit report for this item and:

1. a) for all warehouses → cumulative quantity is 10, cumulative value is 50;
2. b) for warehouse 01 → cumulative quantity is 10, cumulative value is 0;
3. c) for warehouse 02 → cumulative quantity is 0, cumulative value is 50.

Note: Consider using the Hide Items with Cumulative Quantity Zero checkbox in selection criteria of the report when analyzing the report results.