Wasp Barcode Inventory Control - Manual (Page 31)

InventoryControl Printable Help
2.7 Using Cost Tracking and Average Costing FAQ
What cost methods are used by InventoryControl?
InventoryControl provides four costing options:
 Moving Average - When this method is used, the average cost of a particular item is
recalculated based on each purchase.
Example: You purchased 100 computers for $500 each. When you have 10 computers left in
stock, you purchase 100 more, but now your cost for the computers is $600 each.
InventoryControl will calculate the cost of this item as following:
Cost of original computers = 10 x 500 = $5,000
Cost of new computers = 100 x 600 = $60,000
The combined cost of all of the computers is $65,000
Average cost of all of this type of computer that you have in inventory (110 computers) is 65,000
/ 110 = 590.91
 First-In, First-Out (FIFO) - When this method is used, the inventory that is added first is removed
first.
Example: If you added or received 50 Barcode Laser Scanners on the 1st, 8th and 15th, you
would end up with 150 scanners. If on the 17th you remove 60 scanners, all of the scanners that
came in on the 1st and 10 scanners from the 8th would be removed because the scanners on the
1st were first in and, therefore, will be first out. Next to be removed would be scanners from the
8th.
This also is how the average cost is calculated. If the scanners on the 1st cost $300 each and
the scanners on the 8th and 15th cost $320 and $315 each, the average cost on the 16th would
be $311.67.
50 scanners x $300 = $15,000 (from the 1st)
50 scanners x $320 = $16,000 (from the 8th)
50 scanners x $315 = $15,750 (from the 15th)
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$46,500 / 150 = $311.67 average cost
On the 17th you removed 60 scanners so the average cost will become:
40 scanners x $320 = $12,800 (from the 8th)
50 scanners x $315 = $15,750 (from the 15th)
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$28,550 / 90 = $317.23 average cost
Inventory valuation is calculated by multiplying the quantity by the average price. The inventory
value on the 16th is $46,000 or 150 x $311.67. After 60 are removed the inventory value is
$28,550 or $317.23 x 90.
 Last-In, First-Out (LIFO) - When this method is used, the inventory that is added last (most
recently) is removed first.
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