Difference between revisions of "Inventory: Understanding Average Cost"

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Line 7: Line 7:
 
! TxType !! EFFCTV QTY !! ACCUMQTY !! COST !! TOTCOST !! ACCUMBAL !! AVGCOST
 
! TxType !! EFFCTV QTY !! ACCUMQTY !! COST !! TOTCOST !! ACCUMBAL !! AVGCOST
 
|-
 
|-
−
| B || 100 || 100 || 15 || 1500 || 1500 || 15
+
| Beg Bal || 100 || 100 || 15 || 1500 || 1500 || 15
 
|-
 
|-
−
| S || -50 || 50 || 15 || -750 || 750 || 15
+
| Sale || -50 || 50 || 15 || -750 || 750 || 15
 
|-
 
|-
−
| I || 10 || 60 || 20 || 200 || 950 || 15.83333333
+
| Purchase || 10 || 60 || 20 || 200 || 950 || 15.83333333
 
|}
 
|}
  
Line 19: Line 19:
 
! TxType !! EFFCTV QTY !! ACCUMQTY !! COST !! TOTCOST !! ACCUMBAL !! AVGCOST
 
! TxType !! EFFCTV QTY !! ACCUMQTY !! COST !! TOTCOST !! ACCUMBAL !! AVGCOST
 
|-
 
|-
−
| B || 100 || 100 || 15 || 1500 || 1500 || 15
+
| Beg Bal || 100 || 100 || 15 || 1500 || 1500 || 15
 
|-
 
|-
−
| I || 10 || 110 || 20 || 200 || 1700 || 15.45454545
+
| Purchase || 10 || 110 || 20 || 200 || 1700 || 15.45454545
 
|-
 
|-
−
| S || -50 || 60 || 15.45454545 || -772.7272727 || 927.2727273 || 15.45454545
+
| Sale || -50 || 60 || 15.45454545 || -772.7272727 || 927.2727273 || 15.45454545
 
|}
 
|}
 
|}
 
|}
Line 32: Line 32:
 
{|
 
{|
 
| width="33%" valign="top" |
 
| width="33%" valign="top" |
−
 
+
Here, a purchase receipt comes between the +Reversal and -Sale record.
 
{| class="wikitable"
 
{| class="wikitable"
−
! TxType !! EFFCTV QTY !! ACCUMQTY !! COST !! TOTCOST !! ACCUMBAL !! AVGCOST
+
! TxType !! QTY !! ACCUMQTY !! COST !! ACCUMBAL !! AVGCOST
 
|-
 
|-
−
| B || 100 || 100 || 15 || 1500 || 1500 || 15
+
| Beg Bal || 100 || 100 || 15 || 1500 || 15
 
|-
 
|-
−
| S || -50 || 50 || 15 || -750 || 750 || 15
+
| Sale || -50 || 50 || 15 || 750 || 15
 
|-
 
|-
−
| I || 10 || 60 || 20 || 200 || 950 || 15.83333333
+
| Purchase || 10 || 60 || 20 || 950 || 15.83333333
 
|-
 
|-
−
| S || 200 || 260 || 15.83333333 || 3166.666667 || 4116.666667 || 15.83333333
+
| Sale || 200 || 260 || 15.83333333 || 4116.666667 || 15.83333333
 
|-
 
|-
−
| I || 10 || 270 || 20 || 200 || 4316.666667 || 15.98765432
+
| Purchase || 10 || 270 || 20 || 200 || 15.98765432
 
|-
 
|-
−
| S || -200 || 70 || 15.98765432 || -3197.530864 || 1119.135802 || 15.98765432
+
| Sale || -200 || 70 || 15.98765432 || 1119.135802 || 15.98765432
 
|}
 
|}
  
 
| width="33%" valign="top" |
 
| width="33%" valign="top" |
−
 
+
Here, The +Reversal comes immediatelyh before the -Sale record.
 
{| class="wikitable"
 
{| class="wikitable"
−
! TxType !! EFFCTV QTY !! ACCUMQTY !! COST !! TOTCOST !! ACCUMBAL !! AVGCOST
+
! TxType !! QTY !! ACCUMQTY !! COST !! ACCUMBAL !! AVGCOST
 
|-
 
|-
−
| B || 100 || 100 || 15 || 1500 || 1500 || 15
+
| Beg Bal || 100 || 100 || 15 || 1500 || 15
 
|-
 
|-
−
| S || -50 || 50 || 15 || -750 || 750 || 15
+
| Sale || -50 || 50 || 15 || 750 || 15
 
|-
 
|-
−
| I || 10 || 60 || 20 || 200 || 950 || 15.83333333
+
| Purchase || 10 || 60 || 20 || 200 || 15.83333333
 
|-
 
|-
−
| S || 200 || 260 || 15.83333333 || 3166.666667 || 4116.666667 || 15.83333333
+
| Sale || 200 || 260 || 15.83333333 || 4116.666667 || 15.83333333
 
|-
 
|-
−
| S || -200 || 60 || 15.83333333 || -3166.666667 || 950 || 15.83333333
+
| Sale || -200 || 60 || 15.83333333 || 950 || 15.83333333
 
|-
 
|-
−
| I || 10 || 70 || 20 || 200 || 1150 || 16.42857143
+
| Purchase || 10 || 70 || 20 || 1150 || 16.42857143
 
|}
 
|}
  
−
| width="50%" valign="top" |
+
| width="33%" valign="top" |
  
 
If sale and reversal are together - it doesn't matter the sequence!
 
If sale and reversal are together - it doesn't matter the sequence!
 
{| class="wikitable"
 
{| class="wikitable"
−
! TxType !! EFFCTV QTY !! ACCUMQTY !! COST !! TOTCOST !! ACCUMBAL !! AVGCOST
+
! TxType !! QTY !! ACCUMQTY !! COST !! ACCUMBAL !! AVGCOST
 
|-
 
|-
−
| B || 100 || 100 || 15 || 1500 || 1500 || 15
+
| Beg Bal || 100 || 100 || 15 || 1500 || 15
 
|-
 
|-
−
| S || -50 || 50 || 15 || -750 || 750 || 15
+
| Sale || -50 || 50 || 15 || 750 || 15
 
|-
 
|-
−
| I || 10 || 60 || 20 || 200 || 950 || 15.83333333
+
| Purchase || 10 || 60 || 20 || 950 || 15.83333333
 
|-
 
|-
−
| I || 10 || 70 || 20 || 200 || 1150 || 16.42857143
+
| Purchase || 10 || 70 || 20 || 1150 || 16.42857143
 
|-
 
|-
−
| S || 200 || 270 || 16.42857143 || 3285.714286 || 4435.714286 || 16.42857143
+
| Sale || 200 || 270 || 16.42857143 || 4435.714286 || 16.42857143
 
|-
 
|-
−
| S || -200 || 70 || 16.42857143 || -3285.714286 || 1150 || 16.42857143
+
| Sale || -200 || 70 || 16.42857143 || 1150 || 16.42857143
 
|}
 
|}
 
|}
 
|}
Line 94: Line 94:
 
Similar to the case where items were positive, the impact of matching Negative and Postive record have no net effect even when the accumlative qty goes negative:
 
Similar to the case where items were positive, the impact of matching Negative and Postive record have no net effect even when the accumlative qty goes negative:
 
{| class="wikitable"
 
{| class="wikitable"
−
! TxType !! EFFCTV QTY !! ACCUMQTY !! COST !! TOTCOST !! ACCUMBAL !! AVGCOST
+
! TxType !! EFFCTV QTY !! ACCUMQTY !! COST !! ACCUMBAL !! AVGCOST
 
|-
 
|-
−
| B || 100 || 100 || 15 || 1500 || 1500 || 15
+
| Beg Bal || 100 || 100 || 15 || 1500 || 15
 
|-
 
|-
−
| S || -50 || 50 || 15 || -750 || 750 || 15
+
| Sale || -50 || 50 || 15 || 750 || 15
 
|-
 
|-
−
| I || 10 || 60 || 20 || 200 || 950 || 15.83333333
+
| Purchase || 10 || 60 || 20 || 950 || 15.83333333
 
|-
 
|-
−
| S || -200 || -140 || 15.83333333 || -3166.666667 || -2216.666667 || 15.83333333
+
| Sale || -200 || -140 || 15.83333333 || -2216.666667 || 15.83333333
 
|-
 
|-
−
| S || 200 || 60 || 15.83333333 || 3166.666667 || 950 || 15.83333333
+
| Sale || 200 || 60 || 15.83333333 || 950 || 15.83333333
 
|-
 
|-
−
| I || 10 || 70 || 20 || 200 || 1150 || 16.42857143
+
| Purchase || 10 || 70 || 20 || 200 || 16.42857143
 
|}
 
|}
 
| width="50%" valign="top" |
 
| width="50%" valign="top" |
Line 112: Line 112:
 
If a purchase comes between a negative sale and reversal, the ending avg. cost is impacted, but this is still perfectly acceptable and correct handling for the data given.
 
If a purchase comes between a negative sale and reversal, the ending avg. cost is impacted, but this is still perfectly acceptable and correct handling for the data given.
 
{| class="wikitable"
 
{| class="wikitable"
−
! TxType !! EFFCTV QTY !! ACCUMQTY !! COST !! TOTCOST !! ACCUMBAL !! AVGCOST
+
! TxType !! EFFCTV QTY !! ACCUMQTY !! COST !! ACCUMBAL !! AVGCOST
 
|-
 
|-
−
| B || 100 || 100 || 15 || 1500 || 1500 || 15
+
| Beg Bal || 100 || 100 || 15 || 1500 || 15
 
|-
 
|-
−
| S || -50 || 50 || 15 || -750 || 750 || 15
+
| Sale || -50 || 50 || 15 || 750 || 15
 
|-
 
|-
−
| I || 10 || 60 || 20 || 200 || 950 || 15.83333333
+
| Purchase || 10 || 60 || 20 || 950 || 15.83333333
 
|-
 
|-
−
| S || -200 || -140 || 15.83333333 || -3166.666667 || -2216.666667 || 15.83333333
+
| Sale || -200 || -140 || 15.83333333 || -2216.666667 || 15.83333333
 
|-
 
|-
−
| I || 10 || -130 || 20 || 200 || -2016.666667 || 15.51282051
+
| Purchase || 10 || -130 || 20 || 2016.666667 || 15.51282051
 
|-
 
|-
−
| S || 200 || 70 || 15.51282051 || 3102.564103 || 1085.897436 || 15.51282051
+
| Sale || 200 || 70 || 15.51282051 || 1085.897436 || 15.51282051
 
|}
 
|}
 
|}
 
|}

Latest revision as of 18:53, 25 October 2023

Simple Case

Inventory Simple Case - Avg Cost IS impacted by Sequence!!!

TxType EFFCTV QTY ACCUMQTY COST TOTCOST ACCUMBAL AVGCOST
Beg Bal 100 100 15 1500 1500 15
Sale -50 50 15 -750 750 15
Purchase 10 60 20 200 950 15.83333333
TxType EFFCTV QTY ACCUMQTY COST TOTCOST ACCUMBAL AVGCOST
Beg Bal 100 100 15 1500 1500 15
Purchase 10 110 20 200 1700 15.45454545
Sale -50 60 15.45454545 -772.7272727 927.2727273 15.45454545

Inventory With Reversal - All Positive

Inventory with a sale reversal, but keeping it positive! All good, but sequence matters

Here, a purchase receipt comes between the +Reversal and -Sale record.

TxType QTY ACCUMQTY COST ACCUMBAL AVGCOST
Beg Bal 100 100 15 1500 15
Sale -50 50 15 750 15
Purchase 10 60 20 950 15.83333333
Sale 200 260 15.83333333 4116.666667 15.83333333
Purchase 10 270 20 200 15.98765432
Sale -200 70 15.98765432 1119.135802 15.98765432

Here, The +Reversal comes immediatelyh before the -Sale record.

TxType QTY ACCUMQTY COST ACCUMBAL AVGCOST
Beg Bal 100 100 15 1500 15
Sale -50 50 15 750 15
Purchase 10 60 20 200 15.83333333
Sale 200 260 15.83333333 4116.666667 15.83333333
Sale -200 60 15.83333333 950 15.83333333
Purchase 10 70 20 1150 16.42857143

If sale and reversal are together - it doesn't matter the sequence!

TxType QTY ACCUMQTY COST ACCUMBAL AVGCOST
Beg Bal 100 100 15 1500 15
Sale -50 50 15 750 15
Purchase 10 60 20 950 15.83333333
Purchase 10 70 20 1150 16.42857143
Sale 200 270 16.42857143 4435.714286 16.42857143
Sale -200 70 16.42857143 1150 16.42857143

Inventory With Sale/Reversal - Gets Negative

Similar to the case where items were positive, the impact of matching Negative and Postive record have no net effect even when the accumlative qty goes negative:

TxType EFFCTV QTY ACCUMQTY COST ACCUMBAL AVGCOST
Beg Bal 100 100 15 1500 15
Sale -50 50 15 750 15
Purchase 10 60 20 950 15.83333333
Sale -200 -140 15.83333333 -2216.666667 15.83333333
Sale 200 60 15.83333333 950 15.83333333
Purchase 10 70 20 200 16.42857143

If a purchase comes between a negative sale and reversal, the ending avg. cost is impacted, but this is still perfectly acceptable and correct handling for the data given.

TxType EFFCTV QTY ACCUMQTY COST ACCUMBAL AVGCOST
Beg Bal 100 100 15 1500 15
Sale -50 50 15 750 15
Purchase 10 60 20 950 15.83333333
Sale -200 -140 15.83333333 -2216.666667 15.83333333
Purchase 10 -130 20 2016.666667 15.51282051
Sale 200 70 15.51282051 1085.897436 15.51282051
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