The system settings include an option to select the stock costing method used in the reports. Each option has it's own benefits and drawbacks, and which option is set depends entirely on the store owner's preference.
- FIFO is much more susceptible to stock costing issues in the long run, extra care must be taken when capturing GRVs, Return Stock, Stock Manufacture, etc. This method would be best suited to stores that run the GP report on a weekly basis instead of month to month.
- Fixed is easier to see when a Stock Purchase or Return has had the wrong figure entered, resulting in the issue being resolved sooner rather than later. This method suits stores that only run the GP report once a month as it gives a better over-all view of the stock fluctuations.
- Weighted Average for stock costing causes stock costings to be calculated as an average value of the last 30 days of stock purchases. Like fixed, it gives a better over-all view, but is closer in terms of actual value of the stock on hand despite still being an average
Starting from the 1st a particular month, this will follow the purchase and sale of apples.
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This same concept is applied to all stock movement in and out of the store (to external locations, to wastage, including automatic stock wastage percentage, return stock, etc) and each of these calculations are applied on each and every day for every stock item. This means that stock and GP reports can sometimes take a while to run on this setting.
Starting from the 1st a particular month, this will follow the purchase and sale of apples.
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Even though there is still effectively stock on hand at the old price (R0.50), the currently known cost price for apples is R0.75, and therefore your stock on hand is taken at that price.
Weighted Average
The Reports Manual gives an example of how it works:
Starting from the 1st a particular month, this will follow the purchase and sale of apples.
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