Stock Cost Calculation

In the “Journal Memo-Builder” part in the Accounting screen, allows the user to set some parameters to show specific memos when a journal is made.

During setting-up the financial year, the warehouse default movement and the warehouse default movement cost calculation can be set up to the suitable movement. The warehouse default movement can be either set as “FIFO” or “LIFO”. The warehouse default movement cost calculation can be set to:

  • “FIFO”: The calculated unit cost of the stock will be the cost of the first quantity of the item that was added to the current stock.
  • LIFO”: The calculated unit cost of the stock will be based instead on the last quantity of the item that was added to the stock.
  • “Weighted Average”: The calculated unit cost of the stock will be an average of the cost of the costs of all the quantities of the item in the stock.

The warehouse default movement and the warehouse default movement cost calculation can be set while creating a new financial duration from “Financial Duration” from “General Ledger” in “Accounting” from the navigation menu.

  • While creating a new financial duration, you will have two fields representing the warehouse default movement and the warehouse default movement cost calculation as shown below.

  • In “Warehouse Default Movement” you can choose from either “FIFO” or “LIFO” according to the desired warehouse movement.

  • In “Warehouse Default Movement Cost Calculation” choose whether the cost calculation should be “FIFO”, “LIFO” or “Weighted Average”.

  • Click on “Save and Post” to start the newly created financial year and approve the warning message.

  • After carrying out purchasing orders for a certain item, a stock will exist for the different quantities of this item ordered with different costs. As a sample case, we have two purchasing orders for the same item with different dates as shown below.

  • The cost and the quantity of each purchasing order is shown below.
  • The calculated unit cost of the item can be viewed now from “Stock” in “Warehousing”.

  • Choose the stock for the item its calculated unit cost needs to be viewed.

  • A window will be shown with all the details about the current stock of this item and each stock transaction for this stock.

The “Calculated Unit Cost” field will show the unit cost for the stock of the current item according to the chosen “Warehousing Default Movement Cost Calculation” method.

  • If “Warehousing Default Movement Cost Calculation” was set to “FIFO” the “Calculated Unit Cost” in this case will be as shown below.

  • If “Warehousing Default Movement Cost Calculation” was set to “LIFO” the “Calculated Unit Cost” in this case will be as shown below.

  • If “Warehousing Default Movement Cost Calculation” was set to “Weighted Average” the “Calculated Unit Cost” in this case will be as shown below.

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