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Cost Methods

The system allows four different cost methods to be used.

• Average Cost. The system uses the average cost of each item. As stock is received, the average cost is adjusted to allow for the value of the new stock.

• Periodic Average. The Periodic Weighted Average Costing method is where the average cost is calculated at the end of the specified period and the calculated average is used as the new Cost of Goods Sold (COGS) until the next periods cost is calculated.

• Last Invoice Cost. The system uses the last invoice cost of each item. This is the easiest method but means that when new stock is received, all stock is valued at the new invoice cost.

• FIFO Cost. In this method, the system keeps track of each individual stock unit and its cost. As goods are received the system records the cost at which it was invoiced. When a unit is sold, the system takes the cost of the oldest stock unit. Due to the large amount of data recorded, this method is best suited for low volume, high value items.

The default is Average Cost. When you decide which cost you want to use, start System Settings and go to the POS 1 tab. Set the COGS Method to the cost you want to use.