Inventory Cost Correction

The Inventory Cost Correction feature in Manager.io helps ensure your inventory unit costs are accurately calculated and maintained. It examines what your unit costs should be, compares them to current unit costs, and suggests corrections where necessary.

Accessing Inventory Cost Correction

Navigate to the Inventory Cost Correction screen in two main ways:

Method 1 – Through "Settings":

1. From the Settings tab, select Inventory Unit Costs.

2. At the bottom-right corner, click the Inventory Cost Correction button.

Method 2 – From "Inventory Items" or Financial Statements:

• Navigate to the Inventory Items tab and select the Recalculate button located above the Total cost column.
• Alternatively, drill down into inventory account balances on financial statements and choose the Recalculate button above the Total cost column.

Understanding Inventory Cost Correction Screen

The Inventory Cost Correction screen displays several key columns:

• GetDate: Indicates the effective date of the proposed inventory unit cost correction.
• GetInventoryItem: Shows the name of the inventory item for which the unit cost is being proposed.
• GetUnitCost: Reflects the new unit cost that will be used to calculate your costs of sales.
• GetAction: Specifies the type of action needed—either to create, update, or delete the unit cost record.

Processing Inventory Cost Corrections

To implement proposed corrections:

1. On the Inventory Cost Correction screen, select all the suggested changes you wish to implement.
2. Click Execute Actions located at the bottom of the screen to process these corrections.

Note on Page Size

By default, the Inventory Cost Correction screen displays up to 50 suggested corrections at a time. If there are more than 50 adjustments needed, you must either repeat the process or increase the displayed page size at the bottom-left corner of the screen. Expanding the page size allows you to process more inventory unit cost corrections in bulk at once.

Considerations: Lock Date and Historical Adjustments

Manager.io takes your designated Lock Date into consideration when proposing inventory cost corrections. It will not recommend changes in locked periods, preventing accidental change of historical account balances. See Lock Date Guide for more details.

It is natural to ask why Manager.io does not recalculate inventory unit costs automatically as transactions occur:

• Automatic recalculation with each transaction would decrease performance, slowing down Manager significantly. Specifically, when historical transactions are entered, updated, or deleted, recalculating unit costs for subsequent transactions would continuously occur, causing performance issues.
• Businesses utilizing production orders have cascading recalculation effects. Adjusting the cost of one inventory item could influence many others through the manufacturing process, making continuous recalculation impractical.
• Negative inventory situations further complicate unit cost recalculations. If you sell an inventory item before purchasing or manufacturing it, true inventory cost cannot be determined until after purchase or production. Such transactions require backward recalculation of costs once the purchases or production orders are made, significantly taxing system resources if done automatically.

Therefore, to avoid these issues and provide greater control over recalculations, Manager offers the Inventory Cost Correction screen. This feature:

• Allows periodic correction, recalculating only when convenient.
• Gives better performance and predictable outcomes.
• Provides flexibility to adjust historical inventory unit costs with a controlled approach.
• Respects your defined Lock Date, keeping historical balances protected.

This approach ensures accurate, efficient, and predictable inventory management without unintended changes to closed and finalized accounting periods.