which would indicate that this is not a bug. However, I am not interested in the sales invoices in inventory cost when what I want to see is the purchase invoices of the suppliers that I bought the inventory from? Every other expense option on the summary page shows me the purchase invoices and the name of the supplier.
Is there some way that this could be improved so it’s
a: consistent with every other expense in summary as it looks like a bug even though it’s not.
b: enable users to find the purchase invoices of inventory cost transactions which is what I am trying to do at the moment.
In the interim, how do I find the purchase invoices for inventory-cost transactions?
That is because other expenses come (primarily) from purchases. Expenses in the Inventory - cost account are added only by sales transactions. The current asset value of the inventory item sold is transferred from Inventory on hand (or another custom control account, if you’ve assigned an item elsewhere) to Inventory - cost at the average cost. That average cost is not made up of a single, or even a few, purchases, but incorporates the result of your entire purchase history for that item. There could be hundreds of previous purchase invoices, debit notes, and even credit notes that affect average cost at any given moment. But in an average cost inventory valuation system, the average cost is maintained as a moving average, not as a list of specific transactions from which an average is computed. When there is a new acquisition of an inventory item, the cost of the new units are averaged with the existing units to calculate the new average cost.
For example, if you bought 10 units for £20, and 30 units for £30, Manager knows you have 40 units with a total cost of £50, giving you an average cost of £1.25 each for the 40 units. If you buy 10 more units for £25, the new average cost is [(40 x 1.25) + (25)] / (40 + 10) = £1.50. Notice, the calculation used only the prior quantity, prior average cost, and new cost and quantity to calculate the new average cost. The program has already disregarded the fact that the first two lots included quantities of 10 and 30, as well as what their individual lot prices were. This is the big advantage of perpetual moving average inventory valuation: you do not need to keep track of specific past transactions to properly determine cost of goods sold. (In other systems, such as FIFO and LIFO, you have to track those specific purchase lots. And that’s a big computational burden.) With the average cost method, the calculation never gets any more complex than the equation shown above, even after hundreds of purchases.
No, because cost of goods sold is fundamentally unlike any other expense category.
You don’t, because there are no purchase invoices directly associated with the Inventory - cost transactions.
If I understand what you are interested in, you are asking the wrong question. You seem to want to know which particular transactions contributed to the balance of the Inventory - cost account, which is another way of saying to the cost of goods sold. To know that, you would need to list every transaction that has contributed to the average cost of the inventory item at the moment it was sold. Under an average cost inventory valuation system, such a list is not maintained.
I understand why it’s showing the Sales Invoices and not the Purchase Invoices. However this does not negate the need to be able to ascertain which transactions contributed to the balance of the Inventory-cost account.
I hope @lubos one day will have a look at this and see if this could be designed in such a way as to provide that information as the sales invoices in the inventory-cost doesn’t really serve any purpose as the sales invoice information is already available in inventory-sales. In addtion, it bears no relation to the actual transactions in inventory-cost. There is a mismatch between the transactions and the invoice when you click on it.
Oh well, I have managed to work around it this time.
Your comment implies you still miss the point. All previous purchases are reflected in average cost. And you should not expect changes to the cost of goods to match sales invoices. They are prompted by sales invoices, not taken from line items on them.
I am not sure where you are seeing this average cost. I have compared amounts in the inventory-cost and then went into purchase invoices and found the relevant purchase invoice for that particular transaction and they match. There is no average costing here that I am seeing.
Yes I understand that they are not taken from lines in sales invoices, merely prompted from them. That’s the point of my question. I would like the inventory-cost drill down to be more useful as the information progression is not logical in a useful way.
But not to worry, I managed to find the information that I was looking for.
I suspect you just haven’t bought the same item at multiple prices, create a test Business, make two purchases of item A 10@ 10 and 10 @ 20 each = total cost of 300 and on-hand of 20. You could even make those purchases from different suppliers if you want. Now sell one your cost of goods sold will be 15, ie average.
The only way you could truly track a specific supplier cost as COGS for a specific sale would be FIFO, LIFO or with lot tracking or a specific serial number. Lastly I suppose you could be having a supplier drop ship, I.e. cut a PO specifically only in response to receiving a customer order.
Manager doesn’t have supplier drop ship functions and has none of these costing methods. Your inventory item purchases all pass through Inventory as assets using Average costing. Therefore it is not possible nor does it make sense to identify specific supplier invoice costs to COGS for a specific sale transaction.
Ok. I had not realised that the amount was averaged. Very strange. I have been using Manager for four years and this is the first time that I have noticed the problem, so it’s probably not something that I will use very often. In point of fact highly likely that I won’t need it again as going forward I will be pulling the information weekly from the purchase invoices.