View source | Discuss this page | Page history | Printable version   

Costing Rules

This article is protected against manual editing because it is automatically generated from Openbravo meta-data. Learn more about writing and translating such documents.
Back button.png   Back to Warehouse Management



A costing rule can be applied during cost calculation. Each costing rule requires a costing algorithm and a valid from date to properly calculate the cost of material's transactions. The "Warehouse" can be configured as a dimension to take into account while calculating costs.

Costing rules can only be created for legal entities, that is either "legal with accounting" organizations or "legal without accounting" organizations.

Product transactions costs can be calculated for both legal entities types, however only "legal with accounting" organizations support "perpetual" inventory posting as "legal without accounting" organizations do not support any type of posting.

It is important to remark that a costing rule can be validated if a "Currency" is configured for the legal entity in the organization window, therefore costs are calculated in that given currency.

A valid costing rule once created and validated for a legal entity organization will automatically be assigned to the products of that organization, therefore it can be reviewed in the Costing Rule tab of "Product" window.

Costing rules allow to define whether backdated transactions booked for products on a later date need to be adjusted therefore corresponding "backdated transaction" cost adjustments are also created and booked to get the correct cost of those products.

Notice that "Costing Rules" is a feature implemented by the new Costing Engine, therefore a costing rule can be created and validated within an Openbravo instance managing costs only if it has been migrated to the new "Costing Engine".

Openbravo recommends to migrate instances using the "legacy" costing engine to the new costing engine.
Please review the Costing Migration Process article.
Note that the new costing engine is included in Openbravo 3 starting from MP13.

New Openbravo instances or instances which did not calculate cost do not need to migrate to the new "costing" engine but just to create and validate a "Costing Rule" by having into account that:

Costing Rule

The costing rule window allows to define and validate costing rules.


As shown in the image above a "Costing Rule" can be defined and assigned to an organization for which the cost of the transactions need to be calculated.

There can only be one rule valid at a time for an organization which besides needs to be a "Legal Entity" organization type. The valid time period of the costing rule is set by the Starting Date entered.

Once assigned the costing rule applies to every product transaction recorded on the Legal Entity and all its children.

The main property to set in a costing rule is the Costing Algorithm to used while calculating costs.
The Standard and the Average algorithms are available by default. Additional algorithms such as FIFO, LIFO can be implemented by extension modules.

Moreover, costs are calculated at organization level by default, however it is also possible to have the costs calculated for each Warehouse's organization.
This can be achieved by using the Warehouse Dimension flag of the costing rule.

Costing rules need to be validated to start using them. That is done by using the button "Validate Costing Rule".
Once a Costing Rule is validated it is not possible to modify or delete it.
If a costing rule needs to be change that is get by creating a new costing rule with the new setup required.

Let's imagine that an organization requires a new costing algorithm to be used for cost calculation. In that case a new costing rule needs to be created.
The new rule overwrites the existing one starting from a new and later "Starting Date".
In this case:

The closing and initialization inventory balances are managed as Physical Inventories in the new costing engine.
Two physical inventories are created for each organization and warehouse the costing rule applies to:

The costing rule validation process does several checks:

Fix Backdated Transactions

As already described a costing rule can also define whether backdated transactions booked for a product need to be fixed therefore the corresponding backdated transaction cost adjustment are created and booked for that product in order to get the correct cost of the product.

To make this work, one of the following two actions can be taken:

  1. use an existing and validated Costing Rule.
    This way fix backdated transactions feature gets activated by using the process button "Fix Backdated Transactions".
    This option allows entering a "Fix Backdated From" date as starting date, before running the process.
  2. create and validate a new Costing Rule.
    This way fix backdated transactions feature gets activated by checking Backdated Transactions Fixed check-box and filling in a Fix Backdated From date before validating the costing rule.

Both ways:


The initialization tab is a read-only tab which allows to review the "Closing" / "Opening" physical inventory created to validate a costing rule. Every time that a costing rule is validated a new record is created for each Organization and Warehouse. This record contains links to the physical inventories created.

Full list of Costing Rules window fields and their descriptions is available in the Costing Rules Screen Reference.

Back button.png   Back to Warehouse Management

Retrieved from ""

This page has been accessed 22,570 times. This page was last modified on 23 July 2014, at 10:57. Content is available under Creative Commons Attribution-ShareAlike 2.5 Spain License.