Each inventory item is assigned an inventory dimension group. The running average cost price for an item is therefore calculated based on the selection of inventory dimensions that are being tracked financially.

There are two different types of inventory dimensions: item and storage. Item dimensions include configuration, size, and color. Item dimensions are always tracked financially. Storage dimensions include site, warehouse, batch number, location, pallet ID, and serial number. You can choose which storage dimensions will be tracked financially.

Example

If the inventory dimension group attached to the item is financially tracked by warehouse, the running average cost price will be calculated for each warehouse.

The following purchase orders have been invoiced:

  • Purchase order for a quantity of 2 at a cost price of USD 10.00 has been invoiced for warehouse GW

  • Purchase order for a quantity of 3 at a cost price of USD 12.00 has been invoiced for warehouse GW

  • Purchase order for a quantity of 5 at a cost price of USD 15.00 has been invoiced for warehouse MW

The running average cost price for warehouse GW is USD 11.20

The running average cost price for warehouse MW is USD 15.00.

When a sales order invoice is posted for warehouse GW, the value of the inventory and cost of goods sold (before inventory close is run and with no marking) will be USD 11.20. When a sales order is posted for warehouse MW, the value of the inventory and cost of goods sold (before inventory close is run with no marking) will be USD 15.00.

Example

If the inventory dimension group attached to the item is financially tracked by both warehouse and batch number, the running average cost price will be calculated for each batch.

Note Note

We recommend always viewing the cost price with all financial dimensions being tracked.

The following purchase orders have been invoiced:

  • Purchase order for a quantity of 2 at a cost price of USD 10.00; invoiced for warehouse GW and batch AAA

  • Purchase order for a quantity of 3 at a cost price of USD 12.00; invoiced for warehouse GW and batch AAA

  • Purchase order for a quantity of 2 at a cost price of USD 15.00; invoiced for warehouse GW and batch BBB

The running average cost price for warehouse GW and batch AAA is USD 11.20.

The running average cost price for warehouse GW and batch BBB is USD 15.00.

See Also