Update Material Cost Function

@notrinos

yes I just checked the history of this file. I found that earlier it was

if ($qty > 0 && ($qoh != -$qty))
        $avg_cost = ($avg_cost*($qoh+$qty_delayed)+$unit_cost*$qty_new)/($qoh+$qty);

And I think this was perfect because this was taking the Weighted Average of the Item Produced

Later this was changed to

if ($qty > 0 && ($qoh != -$qty)) {
        if ($qoh == 0 && $avg_cost != 0)
            $avg_cost = ($avg_cost + ($unit_cost*$qty_new)/$qty)/2;
        else
            $avg_cost = ($avg_cost*($qoh+$qty_delayed)+$unit_cost*$qty_new)/($qoh+$qty);
    }

Here I am unable to understand that why we need to take Simple Average for condition

if ($qoh == 0 && $avg_cost != 0)

Assume following transactions
1. Item A was produced qty=300 with cost allocated after WO process = 50
2. Item A was sold qty = 300 @ 200 price
3. Item A was again produced qty = 400 and cost allocated after WO Process = 60

Now as per your revised condition the Average Material Cost calculation is taking the weightage of Cost 50 (Existing Avg Cost)

hence New $avg_cost will be calculated as 55

While the Old working will calculate the Weighted Average, that will Nullify the Weightage of 50 (Existing Avg Cost) and New $avg_cost will be calculated as 60, that is required.

Not at all @notrinos

I have gone through though the above post. I don't know how to fix the  dashboard issue but this is violating standard Accounting Principles

The material cost shows the per unit average cost of the item A at any given point in time in the system.

After the step 3 the system will pass gl transaction as below

Inventory.              24000
        Wip.                          24000

While inventory valuation report will show the value of stock as 22000

Secondly if we sell all 400 in Step 4 the gl transaction will record as below

Cost of Goods Sold.          22000
        Inventory.                             22000

Hence the inventory ledger will be left with 2000 not legitimate, the profits are over valued.

@joe, @itronics, @notrinos please think over it and get it rolled back to original one.

Hello @boxygen

I found the cause of this issue is not the new calculating method, it gives more accurate average cost than the old method.
The problem is when updated this new method for manufactured items cost we did not update the same method for component/purchased items cost so that system calculates wrong inventory values.

I guess the solution would be: lines 66, 67 of grn_db.inc needs to be replaced with

if ($qoh + $qty > 0) {
            if($qoh == 0 && $material_cost != 0)
                $material_cost = ($material_cost + $price_in_home_currency)/2;
            else
                $material_cost = ($qoh * $material_cost + $qty * $price_in_home_currency) /    ($qoh + $qty);
        }

Will take a closer investigate tomorrow

Yes @boxygen
Problem is not solved with new method applying to grn_db.inc
Thank you for correcting my serious mistake.
I have to find another way to get this cost value.

@joe THIS COMMIT
needs to be rolled back.

Ok I will roll it back in a while.

Joe

@joe
Nothing changed in the rollback

code block from line 106 - 111 needs to be replaced with:

if ($qty > 0 && ($qoh != -$qty))
        $avg_cost = ($avg_cost*($qoh+$qty_delayed)+$unit_cost*$qty_new)/($qoh+$qty);