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

To switch between FIFO and Fixed Stock Costing methods, go to System Settings > All Computers > Program Files > Reports.

FIFO
The term 'First In, First Out' is descriptive of how Aura handles the stock flow through the store; the reports will be calculated as the oldest stock being used first even if new stock has been purchased in the meantime. In the following example, very simple figures are used to make it as easy to follow as possible:

Starting from the 1st a particular month, this will follow the purchase and sale of apples.
  • 1st: 10 apples are purchased at R0.50 each. 
    • 3 apples are sold (price irrelevant) 
    • Stock Take: 7 apples 
      • 7 apples at R0.50; R3.50 stock on hand value 
  • 2nd: 10 apples purchased at R0.75 
    • 3 apples are sold (price irrelevant) 
    • Stock Take: 14 apples 
    • 4 at R0.50 
    • 10 at R0.75 
    • Total: R9.50 stock on hand value

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.

One other important point to keep in mind is this setting is more likely to be affected by stock price errors. For example, if a stock item is purchased at an incorrect value due to a missed digit (for example, entering a purchase for R500 and missing a 0, leaving R50), if stock is sold before the price is corrected, there will be a very high fluctuation in the costing calculations even after correcting the price.

Fixed
As the name suggests, this method uses a much more simplified calculation method for the stock costs - using only the last known purchase price of a stock item. See the same example again using Fixed stock cost calculation:

Starting from the 1st a particular month, this will follow the purchase and sale of apples. 
  • 1st: 10 apples are purchased at R0.50 each. 
    • 3 apples are sold (price irrelevant) 
    • Stock Take: 7 apples 
      • 7 apples at R0.50; R3.50 stock on hand value 
  • 2nd: 10 apples purchased at R0.75 
    • 3 apples are sold (price irrelevant) 
    • Stock Take: 14 apples 
      • 14 apples at R0.75; R10.50 stock on hand value 

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.

  • 1st: 10 apples are purchased at R0.50 each.

    • 3 apples are sold (price irrelevant)

    • Stock Take: 7 apples

      • 7 apples at R0.50; R3.50 stock on hand value

  • 2nd: 10 apples purchased at R0.75

    • 3 apples are sold (price irrelevant)

    • Stock Take: 14 apples

      • 7 that were purchased at R0.50 each, 7 that were purchased at R0.75 each

      • Weighted average then finds the last 30 days of purchases, combines their total value, then divides by the total items purchased in order to get the average value ((10x0.5)+(10x0.75)=12.5. 12.5÷20=0.63)

      • 14 apples at R0.63; R8.82 stock on hand average value.