Inventory Costing - AVERAGE COSTING

 Inventory Costing

AVERAGE COSTING

• Under average costing, all asset purchased items in inventory are valued based on their purchase order cost. 
• This results in item unit costs that reflect the weighted average of the purchase order unit costs for all quantity on-hand. 
• There is only one average unit cost for each item in an organization.

Now Let's Define Costing,

Go to Org Parameter in Costing tab define Costing Method as Average

• Here when the Retailer Purchase material from supplier price will get Updated
• When the Retailer sells the product to customer price will not get Updated.

Now Create a Item and Perform Transaction

In Transaction select type as Receipt then give item, sub-inv, qty, unit cost

 

Save the Transaction and Check the Cost of the Item

Inv->Cost->Item Cost

search with the item

Now add some more stock to the item and give Unit Cost

now check the cost of the Item

Now Issue some stock for that Item 

now check the cost of the item

Here cost should not update whenever we perform Transaction Issue