The NCAS also provides for a manual adjustment of average cost. Manual changes to average costs are processed on the Average Cost Change (ACC) screen. The manual average cost change is processed by the system during the next nightly offline procedure.

When the manual average cost change is processed, the system computes the item warehouse value adjustment to calculate the change in the inventory value due to the average cost change. The adjustment is calculated for that item at that warehouse. The item warehouse adjustment value is the product of the current item balance and the difference between the old and new average costs. The formula for this computation is shown below:

Item Whse Value Adjustment = (New Avg Cost - Old Avg Cost) Current Item Whse Balance

To account for the average cost change, the system generates accounting entries within the items group account to adjust the general ledger value for the specified inventory. (Refer to the Average Cost Adjustment transaction in the Accounting Activities Table.) Depending on whether the adjustment is positive or negative, the Inventory asset account (A010) is debited or credited for the amount of the item warehouse value adjustment. The corresponding credit or debit is charged to the Reserve for Inventory account (event ID A020).

In addition, an inventory adjustment account is debited for a negative adjustment and credited for a positive adjustment. The adjustment can be charged to a particular GL distribution or it can be charged to the items group account. If the adjustment is charged to the group account, event ID E020 (the Inventory Adjustment account) will be debited or credited within the group account. The corresponding credit or debit is charged to the Expense Offset account (event ID A100) within the appropriate group account.