When viewing list of inventory items, Manager was displaying “Qty on hand” and “Value on hand” columns to show how many inventory items there are and what is their value. If one wanted to calculate average cost per unit, it would have to be done manually by dividing value and qty. The latest version will show new column “Average cost” which is useful to make sure selling price is above the acquisition cost.
Excellent added feature!
@lubos I am trying to use this feature by manually entering the cost of each of our items. I use an Excel sheet where I calculate the exact cost and taxes for each item. For example for an item I have a starting balance of 30 pieces, I add an average cost of 10.000, and the total value on hand is 300.000. However, when I go in the list of items I see that I have 12 pieces in stock (18 were indeed sold) and the avarage cost is 8.082.
First of all it is not clear if the average cost is inclusive or excluisive of VAT or other taxes, but even if the 10.000 include the 18% VAT we work with and that is indicated as Tax Code for each itme, the value without VAT should be 8.474, not 8.082.
Can you explain why this happens?
You haven’t given quite enough information to diagnose your problem. But let me make several points:
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Starting balances for inventory should be used only when you are transferring to Manager from another accounting system and have inventory quantities and average costs from the old system to carry forward. All other inventory costs should be entered as either payments or purchase invoices, depending on how you bought the stock from suppliers.
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When using starting balances, no taxes should be included. The amounts to enter should be only the cost of the goods.
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Average cost is exclusive of any taxes. The value of your inventory has nothing to do with how much tax you paid to acquire it or how much you might charge when you sell it.
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The Tax Code field for each inventory item helps with pre-filling line items on forms. It has no impact on average cost.
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You did not explain how you got from your spreadsheet to Manager (manual entry of every item, batch import?). I suspect your 8.082 figure came from your own spreadsheet, subtracting 18% from your 10.00 unit cost.
@Tut Thank you for the feedback.
Yes, I started to use Manager when our business was already going and added the starting balance of all items already in stock.
We import wine and when we receive our stock we pay a total of about 130% in taxes + 18% in VAT. In my separate spreadshit I calculate each and every cost inclusing transport and taxes. Taxes are a cost for us, a huge part of the cost of each bottles that is paid upfront and goes into the calculation of our resell prices, and therefore when I enter my avarage cost I would like to add this 130% tax, though not the VAT.
Does Manager calculate the avarage cost based on the purchasing prices that are entered in the purchase orders? But in that case, why do many of our items in the inventory list miss the avarage cost?
Maybe I have to add these taxes somewhere else in Manager so that they are automatically added to the avarage cost? In fact, I haven’t even added trasport costs anywhere, as I was thinking of simply adding all costs manually to the avarage cost.
Note that I use Manager mostly as a tracking system of our stock and to produce invoices etc. Our accountant uses Quickbooks separately. But I would like to slowly use Manager as our accounting system to double check what the accountant does.
Manager does nothing with purchase orders except save them so they ca be copied to purchase invoices or other forms. They have no financial impact. They are just a way to simplify ordering things. They are completely optional.
Taxes, fees, transportation, etc., that are part of your “landed cost” can be included in the cost, independent of any tax code. Make sure, however, that you are only applying VAT to the portion where it is applicable. I don’t know what that is in your situation. You can add any of these other costs by allocating a line item on the purchase invoice to the inventory item but leaving quantity blank. The average cost will adjust without changing quantity on hand. Be careful, though, that you are recording the correct payee. In other words, if you pay all those costs to your supplier, they can go on the same purchase invoice. But if you pay the tax portion to some tax authority and transportation costs to a freight company, you would need multiple transactions for the different payees.
Then you shouldn’t expect things to behave correctly. Manager is a full, double-entry accounting system and will be correct only if you use all necessary modules for your business and make all relevant entries.
Sorry I meant Purchase Invoices (which often come from Purchase Orders).
So it means that Avarege Cost actually depends on all the costs associated to a specific items coming from Purchare Invoices, and I cannot enter the Avarage Cost myself manually like I described before. Correct? Then the option to add the Avarage Cost for the starting balance is used to give a value for this specific preexisting stock, and Manager will use Purchase Orders of the new stock in order to update the overall Avarage Cost of the stock on hand as of today. Right? Which also means that probably Manager uses a first in first out method?
Thanks a lot for your help!
In that case, the answer is partially yes. It also takes into account inventory purchases via direct payments.
Correct. Manual entry of starting balances is only for converting from another accounting system.
No. It will use purchase invoices and payments. (Maybe you made the same mistaken in typing?)
No. It uses perpetual average cost, which is independent of order.