Inventory items average cost

1

May I ask why the average cost of inventory item is 0 when the existing quantity of the inventory item is 0, even if you have purchase invoice for this item?

2

Neither should normally be zero. Can you show screen shots of the purchase invoice and the Inventory Items line for the item? One possibility is that you were previously in a backorder situation and the purchase invoice only returned stock level to zero. Drill down on the Qty on hand or Qty owned figures in the listing and show a screen shot of the item’s transaction history, too.

3

@Tut, what I am saying is that when the remaining quantity in the inventory is 0, then the average cost of the item is also 0, and this happen even if you have purchase the specific item in the past. My opinion is that the average cost should not be 0, even when the remaining quantity of the item is 0 (because you have sell all the quantity of the purchase item)

4

When Inventory goes to 0, then the average cost goes to 0, because all the inventory that created that average cost has gone. If you buy new inventory (months or years later) then that new inventory creates a new average cost which would be totally unrelated to any past average cost.

If you sell the inventory before you buy the new inventory, then COGS value is not created until the Purchase Invoice is processed

5

@pandhm, I thought you meant that quantity was 0 even though you had entered a purchase invoice that added to inventory level. If you only meant that you had entered a purchase invoice some time in the past and the quantity had now been reduced to zero, @Brucanna has answered your question.