Stock Valuation


I wonder if anyone can help us. We do not have our inventory integrated with our financials at the moment so we are calcuating our Cost of Goods sold as Opening stock add Purchases - less Closing Stock.

We operate a FIFO policy and when the Sales Team look at the margins they take actual sales value minus actual cost to get their margins.

When we do the margin calculations we use the Opening Stock (from NAV - which values the stock on an average basis - not actual costs) plus actual costs of Purchases less Closing stock (from NAV valued at average cost). This is really throwing our figures out as the average value and actual value can be very different.

Any advice as to how we can overcome this would be very welcome.

Run the Item-Adjust Cost batch job to update the cost as per the costing method specified on the Item Card.

Further to have Average cost or Actual cost (can only be acheived with Specific Costing and Item tracking) is a management decision of your company and I wonder how we can help.

I advise you to consult a finance functional consultant as costing might differ for balance sheet purpose and routine margin analysis.