Let me guess, you use Average cost as a valuation method. Is that correct.

We just FIFO.  The error is totally messing up my GP% Reporting.  I can fix it easily for financial reporting purposes but management utilizes the GP% by product line and as they say garbage in garbage out it will not be helpful to make decisions with because it is now not accurate.

If you are using FIFO had did the cost of the item end up being over-stated?

A costing error was made in writing a production entry.  Customer service was notified not to invoice the customer before the correction was made.  They forgot.  On top of that the correcting entry was processed.  When we tried credit memoing the customer in used the last cost no the cost it was invoiced at.  Therefore my   COGS is overstated.

Yes that is a problem. With FIFO the system uses the last cost, there is no way for you to select the cost that was used.  You might be able to make a GL entry to reduce the COGS, not sure what the off-set would be.