Overview: The system is equipped with multiple fields to help track item cost based on purchases and stock counts. This feature requires additional setup and maintenance elements.
There are five different records in Restaurant365 that will drive item costing functionality:
- Units of Measure
- Purchased Items
- Item Location (Optional)
- Vendor Items (Optional)
- Base for this type = OZ-fl
- Examples: OZ-fl, cup, gal, quart
- Base for this type = OZ-wt
- Examples: OZ-wt, lb, kg
- Each – base for this type is also Each
The system comes with a pre-set list of standard Units of Measure. If the desired U of M is not in the list then create a new one and set the following fields:
Name: This name will display when selecting the u of m on transaction or when viewing on reports. This is the only required field if Item Costing is not selected on Preferences.
Container: Optional text field to designate container type such as box, case, sack, etc
Packsize Description: Optional text field to describe packsize
Purchase: This checkbox will determine whether the unit of measure will appear on the AP Invoice as a possible unit for purchases
The other 2 fields are associated with Equivalence and are only needed if Item Costing is selected on preferences. The Equivalence helps the system determine how one unit of measure relates to another. To set this up specify an Equivalent U of M and Equivalent Qty. For example, if OZ-fl exists in the system but ‘cup’ does not then when setting up the u of m for ‘cup’ you would specify Equivalent U of M = OZ-fl and Equivalent Qty = 8 because a cup is 8 fluid ounces. A U of M can only be set as equivalent to a u of m of the same measure type. So you wouldn’t be able to say lb = 16 OZ-fl because fl is volume and lb is weight and while that equation is true for water it isn’t true for other substances like gold (or flour if you don’t have much gold in your restaurant). The item record has fields to specific how weight and volume relate to each other for that specific item so it isn’t set at the global Unit of Measure level. Another example that would work is if you track something in 20lb cases then create a new unit of measure named 20lb Case and set Equivalent U of M = lb and Equivalent Qty = 20.
The Item record has many important fields for item costing. The system has the ability to store Item Location records which have some of the same fields as the item records but can be further defined for specific locations. There are also Vendor Item records where some information about the item can be tracked differently for different vendors. When no Item Location or Vendor Item record exists the information from the Item record will be used. Fields on the item record:
Name: This is the item name that will display on other forms when referencing this item
Number: Optional item number that will display in some reports associated with this item
Description: Optional additional description about the item
Available to in AR Invoices: Mark yes if this item will be sold to customers and should appear on AR Invoices
Inventory Account: GL account that will be debited on stock count if count quantity is higher than previous count and credited if quantity is lower than previous
Inventory U of M: Unit of measure this item will be counted in for stock counts. This is required and very important in order to manage item costs. This can be set for individual locations on the Item Location record if desired.
Inventory Cost: This is the cost of the item based on the Inventory U of M. This can be set for individual locations on the Item Location record if desired.
Default Purchase U of M: This field is required and designates the default unit of measure this item is purchased in. This can be set for individual vendors on the vendor item record if desired.
Cost Update Method: 3 options exist for the cost update method
1.Manual: This is the default and means the item cost will be updated by the end user either when entering stock counts, or by opening the Item or Item Location record and setting it.
2. Auto Update From Invoice: Item cost will be updated during invoice entry each time an invoice is entered. This will update the Item Location record if one exists for that item and location combination and if not then it will update the Item record
3.Auto Update Avg Last 3 Invoices: As the name describes this will auto update just as the Auto method but it will average the 3 most recent invoices instead of just the most recent.
Brand: Optional text field to specify brand
Item Location(left hand navigation: Operations – Inventory – Item Locations/ or ribbon: Item Actions – New Item Location)
Item: Lookup of item record
Name: Text field to describe this record (by default will be set as Item Name – Location Name)
Inventory U of M: Lookup of u of m record this location counts this item in
Cost: Cost of this item at this location based on the inventory u of m. This field will update automatically if Cost Update Method on item record is set to Auto Update From Invoice or to Auto Update Avg Last 3 Invoices. If Cost Update Method is set to Manual then this will only be updated by making a change in this window or by changing the cost when entering a stock count.
Vendor Items can be setup to set a few fields for an item for a specific vendor. These records aren’t required and if no item vendor record exists then the values on the item are used instead. In order to import an invoice from a vendor then Vendor Item records are required and if missing then a record will be created during import and the user can finish setting up the record after the import completes. Vendor Item fields are:
Item: Lookup of item record
Vendor: Lookup of vendor record
Vendor Item Number: Text field of the number this vendor references this item by
Vendor Item Name: Text field of the name this vendor references this item by
Purchase U of M: Lookup of u of m record used as the default purchase u of m for this vendor for this item. U of M can be changed on each individual invoice but this value will be the default
Split U of M: Lookup of u of m record used as the split u of m for this vendor for this item. This is only used by some vendors and referenced in their invoice import files
Using Item Costing
The Transactions in the system using Item Costing are AP Invoice and Stock Count.
AP Invoice(ribbon: Vendor Actions – New Invoice)
This section describes item costing specific elements of the AP Invoice. For full training on AP Invoice please refer to AP Invoice training. When creating a new invoice upon selecting the vendor the system checks if the Entry field for that vendor = by Account or by Item. If by Item then the item detail grid displays in the window. This allows the user to enter item purchase details for this invoice based on the following fields:
Item: Auto complete dropdown list of items
Vendor Item: This is read only field that will populate with Vendor Item Number if a Vendor Item record exists and is for reference purposes only
U of M: Auto complete dropdown list of units of measure. This will only display measure types available for this item so if this item is only setup for Weight then only weight units of measure will show here, and the same for volume and for each.
Quantity: Quantity purchased
Each Amount: Cost of item based on unit of measure selected
Total = Quantity * Each Amount
Account: If item is populated then Account is set as Cost Account on item record. If no item is selected then Account is editable and user can choose an account on this row instead of choosing an item. If user chooses account then they can set the Total field manually and can disregard Item, U of M, Quantity, Each Amount
Location: This defaults to the location in the invoice header and contains lookup to other locations in the system as well
Note: To add items to the invoice that you do not want to use Item Costing for, simply skip the item field and tab to the ‘Total’ field and enter the total amount for that item. Next, tab to the ‘Account’ field and select the appropriate GL account. Next, tab to the ‘Location’ field and select the appropriate location. Then, tab to the ‘Add’ button and add the item to the invoice. As you can see you now have an invoice that has entries with ‘Item Costing’ and entries without ’Item Costing’
Stock Count(Operations – Inventory – Stock Counts or open Stock Count Template and click Use to create a Stock Count)
This section describes item costing specific elements of Stock Count. For full training on stock counts please refer to Stock Count training. When a stock count is entered the Cost field will be editable on all rows where the Cost Update Method of that item = Manual. Updating the cost manually here will update the cost on the item location record if one exists for this item for the location of this stock count. If none exists it will update the Inventory Cost on the item record.
The system contains item specific cost analysis reports on the accounting reports page located at Accounting – Home – Reports (reports are in Vendors section)