What is item cost and by which document addition will it be affected in sap b1?

[anand_jha7 · Accepted solution]

Hi,

What Is Item Cost in SAP B1?
The Item Cost is: The value of the item per unit in the warehouse. Calculated and updated based on inventory transactions.

Dependent on the valuation method used:
Moving Average
Standard Cost
FIFO (First In, First Out)
Serial/Batch (SAP B1 Version 10 & above).

Document Type	Affects Item Cost?	Notes
Goods Receipt PO (GRPO)	✅ Yes	Increases stock; adds cost based on PO price.
AP Invoice (linked to GRPO)	❌ No	Doesn’t affect cost (for moving average/FIFO); only financial.
Goods Issue	✅ Yes	Decreases stock; cost is removed from inventory.
Inventory Transfer	🔁 Maybe	Only if moving between warehouses with different costs (FIFO tracked by warehouse).
Inventory Adjustment	✅ Yes	Adjusts stock up/down; impacts cost based on price entered.
Production Order – Receipt from Production	✅ Yes	Adds finished product to stock with cost based on components.
Production Order – Issue for Production	✅ Yes	Removes raw materials; affects component cost.
Returns (Purchase Return, AR Return)	✅ Yes	Decreases inventory; returns at the original cost basis.
Landed Cost Document	✅ Yes	Increases item cost retroactively by distributing additional costs (freight, customs, etc.).
Opening Balance (Initial Quantities)	✅ Yes	Establishes the starting cost for items.

[user2001 · Accepted solution]

Will it be possible for PO document and GRPO document to have different prices.I am confused which cost will be taken during item cost calculations (based on moving average).Please clarify

[anand_jha7 · Accepted solution]

Yes, it is possible for the PO (Purchase Order) and GRPO (Goods Receipt PO) documents to have different prices in SAP Business One. The system allows you to change the unit price at the time of GRPO, even if it's different from what was originally entered in the PO. Regarding the item cost calculation using Moving Average, SAP Business One will use the price from the GRPO document for updating the item cost — not the PO price. This is because the GRPO is the actual transaction that affects inventory levels and valuation. So, the moving average cost will be recalculated based on the GRPO price and quantity at the time the items are received into stock.

[user2001 · Accepted solution]

Thank you .one question please.The item cost should usually be seen in item master data for individual item under inventory tab.I did good receipt (migrating data from old to sap b1) for the first time with unit price.But somehow I am not able to see cost in item cost field.What could be possible reason for this?