Feature Overview: Group Average Costing

As you journey through your NetSuite implementation, one important consideration may be deciding which costing method to use for your items. NetSuite offers a multitude of costing methods which, when properly configured, help you maintain accurate costs and costs of goods sold. One such costing method we will review today is Group Average Costing. Traditionally, Average Costing in NetSuite has been one average cost per location. However, NetSuite also offers Group Average Costing as a way to maintain a single average cost across multiple locations. How do we set this up? Read on to find out.

Prerequisites and Considerations for Group Average Costing

The idea behind Group Average Costing is to track a single average cost across multiple locations. As such, one of the prerequisite features is having Multi-Location Inventory enabled. Additionally, keep in mind the following considerations:

• • Inventory Adjustment Worksheets do not yet support items set up with Group Average costing.
  • Once the Costing Method is set on an item and saved, it cannot be changed.

Enabling the Feature:

1. 1. Navigate to Setup > Company > Setup Tasks > Enable Features.
   2. Navigate to the Items & Inventory subtab and check the Group Average Costing
   3. Save.

Once enabled, the next step is to set up a location costing group. A location costing group is simply the group of locations that will share the same average cost.

Location Costing Group Setup:

1. 1. Navigate to Setup > Accounting > Location Costing Groups > New.
   2. Enter a Name for the Costing Group.
   3. Set the Costing Group Currency.
      1. Note: All Locations within a Costing Group must share the same base currency.
   4. Optionally, enter a Memo.
   5. Select the Locations you would like to include in this Costing Group.
      1. Note: You can also forego assignment at this point, and instead assign it later through the Location record.
   6. Save.

Adding New Items and Maintaining the Average Cost

After performing the initial setup, adding new items will allow you to choose the Group Average Costing Method. As you transact with the item, NetSuite will maintain a single average cost within the location groups you have specified in the costing group. You can have multiple costing groups with distinct locations.

As always, assessing the process is key to understanding the full system behavior. Where possible, I recommend enabling and evaluating the feature in a Sandbox environment and walking through all GL impacting transactions to assess impact and behavior.

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