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Accounting
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Anthony Iloenyosi

I would like to find out if there are any accounting consequences if I start with Standard Price Costing Method and management decides to change the costing method to Average Price or Real Price Costing, bearing in mind that transactions have already occurred on the products that were initially set to Standard Price Costing method via the product category.

We currently use Perpetual Inventory Valuation Method and Standard Price but we're beginning to explore the benefits of using Average Price Costing Method. I would like to find out if there would be any consequences on the balance sheet, or any accounts.



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shalin wilson
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Standard Costing:
 This method is very basic and easy. What we have to do is, just put the cost price on product master.- The inventory valuation will not consider the amount for which you bought this item. It directly takes the cost price you provided on product master.
 Average Costing:
In average costing method, cost of items in inventory is calculated based on the average cost of all available similar items in inventory.- i.e cost of an item in inventory divided by the number of items available in stock. 
Real-Time Costing: 

 In real time inventory valuation method, Odoo keeps the track of the cost of each incoming and outgoing items. Real-time costing method works along with stock removal strategy.Ie (FIFO, LIFO, FEFO). So we have to select one of them in product category formOtherwise, Odoo will take FIFO as default.

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Anthony Iloenyosi
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Hi Shalin, thank you for your response. I do know how each costing method works. What I'm actually asking is how Odoo would handle the situation if I start with Standard Costing Method and then decide to change to Average Costing Method. e.g. I have a product category called "helloWorld". helloWorld is initially configured with Standard Costing Method, however I decide I don't want to use Standard costing anymore and decide to change the costing method to Real Price or Weighted Average for helloWorld. Would Odoo allow me to do this? or do I have to deprecate the helloWorld product category and create another product category?

shalin wilson

you can change to whatever you want ,odoo will handle it

cost valuation will be reflected.

checked Odoo 12.0+e (Enterprise Edition)

Anthony Iloenyosi
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Hi Shalin, thanks for your response!

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Ricardo Gross
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Hi,

You can change it at any time but changing your cost method is an important change that will impact your inventory valuation.

BR

Ricardo

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Anthony Iloenyosi
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Hi Ricardo,

Thank you for your response! This is helpful, if it's not too much trouble. In what way would it affect the valuation? Could you please elaborate? It would be extremely helpful.

Anthony Iloenyosi
Author

Thanks! I'll give it a look.

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francis hwenha
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l changed costing method everything turned upside down , we had to restart entering everything again on new database l think an improvement is needed there l was using standard method so we changed to AVG then back to standard the cost of revenue continued to increase l think its a bug

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