Hey Community
My inventory average cost is showing wrong figure after I recalculate inventory. See below image
The Egg showing average cost of 52,109 supposed to be 4700 and mamagold flour showing 140,228 supposed to be 63,500
Please how can I rectify this issue it affecting my account
Heving same issue. It seems that the total cost is calculated based on the cost on total quantity from the beginning, not the quantity owned. For example if you click on the total cost for EGG, you will see that 1,980,162.50 is the total debit from the beginning.
@lubos
It seems to be a mistake in the calculation algorithm.
Welcome to the forum @Avenir,
That’s an interesting remark you made right there.
Can you please walk us through the steps that led you to this conclusion?
Thanks @Ealfardan
Let me show on a test company.
I buy 20 apples in two parts, one part at $1 and the other at $3. I sell them in 15 apples in 3 parts, all at $2.
This is the details showing $40 inventory valuation, which is clearly not correct, unless I manually set the unit cost at each sale:
It can also be seen that on 10 May, although the inventory is zero, the balance is not still zero due to the fact that the adjustment on zero inventory is only applied at the closing date by the software.
You do not need to set the unit cost manually. Click recalculate button and batch create unit costs.
Yes, you can correct the unit cost in “batch”, using the Recalculate button, but it is still manual update; I mean you buy goods, then you sell goods, and normally, based on your inventory cost calculation method (WA or FIFO) the COGS should be calculated to a non-zero value.
In my example, although there is only 5 units remaining in the inventory, the inventory shows purchase amount for the whole inventory from the beginning, the COGS is zero, and hence the profit is shown incorrectly:
With the current algorithm, the correct cost of goods is reflected in your P&L only after the inventory is zero, unless you manually (one by one or in batch) update the unit cost in a separate data entry step.
This is not something new and this has been discussed in detail already. So using the Recalculate is only option right now and its manual but require only two or three clicks and you just have to do it at the end of the day or week or month depends on you.
When I tested using FIFO as the inventory valuation method, the system ignored it during the recalculation process and applied the Weighted Average method instead.
