Alternative Inventory Costing Method

Hello Everyone,
Any possibility of making a choice of inventory costing method other than average costing method?

Sorry but no.

Please can you help for factors in defense of Average cost . My client wants a different method.

As you may be aware Manager in the guides explains it uses average cost. Search the forum to find out why.

The only defense is that the developer chose this method. If your client won’t use it, then your client cannot use Manager for inventory control.

For a feature to be added to Manager, the developers would need to be convinced the feature added significantly to Manager and it was not to expensive to add. Both of these requirements are relative to other ideas the developers are aware of.

Also you don’t really want Manager to offer a different method to average cost, you want a specific other method.

To increase the chances of your other method being implemented you could describe what you actually want and justify the case based on things like jurisdictions requirements or how commonly it is required.


I am not against the idea / request for using different inventory costing methods. I actually do not like the average method as most of our businesses operate in volatile costing environments where the price of goods continuous suffer inflationary pressures. Every batch cost price is significantly different and In these cases the average costs undervalue the cost of goods sold in the P&L and thus inflates the gross profit value.

If I where to make a case I would therefore add the FIFO method because the Average method does not reflect the prevailing economic values. The FIFO method (First In (purchased) is First Out (sold)) is also important to reflect businesses with perishable products, be it farming, food retail and restaurants.

Very correct@Eko, most Accounting/Inventory Softwares are aware of this reason why they include FIFI, LIFO etc as options.

It will be worth a while if @Manager team will look at it for possible inclusion in future update.

You know choice of costing method ought to depend on individual business/economic environments. Most African business environments are very volotile, prices fluctuate.

It will make sense if we have options of the major costing methods such as fifo, lifo in addition to the default average cost.

Why I am not pressing for any method is because we use separate systems for inventory management and just use summaries for accounting in Manager. However, as Manager has an inventory module it would make sense to at least offer a method that is more used than the average costing one and with FIFO definitely one of the most accurate inventory valuation systems.

You are right@Eko

I searched the forum and it is clear from below why FIFO can not be implemented by the developer.

That is factually correct but I’m not convinced it matters. Items purchased on the same day are likely to be a similar price and the effect on business profitability estimation would be minimal compared to using vs not using FIFO.

Same here so the presence or absence of the functionality makes no difference to me other than the time taken to implement it distracting from other ideas.

If it’s not possible or it’s difficult implementing cost method options, it’s understandable. All these back and forth excuses aren’t necessary.

It has always been global best practice to have options when you have different types of methods on a particular accounting tool for a global software such as Manager, so as to afford users the option to chose what’s best for them.

Ie, Accrual vs Cash basis of accounting
Depreciation methods, etc.

They are a fundamental part of open discussions of the merits of any idea.
Presentation of a variety of perspectives is very useful in my opinion.

It would be great to have FIFO added for especially those of us in countries with unstable commodity prices.

It should be set up so that the policy is chosen on the business creation screen and that once chosen, it cannot be changed.

You’ll have to start a new business with your adjusted balances from the old one if you wish to change the policy.

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All should understand what a major change this would be. Average cost is calculated on the fly and therefore places low demand on resources. FIFO or LIFO requires perpetual storage and reference to individual units’ procurement histories. Resource demands are much higher.