i have a product i bay it with different price and the costing method i used the average costing method . I registered Purchase with back date and system didn't calculate correct cost . it use the final cost of the product not the cost which was in the date of the purchase order . why ????
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Hi,
In the average costing approach, the cost of a product is determined by
averaging all of its purchasing costs. The system records the many
purchase prices you pay for a product and determines the average cost
based on those prices.
However, the system cannot recalculate the
average price for that particular purchase date if you record a
transaction with a backdate. The current average cost as of the current
date can be used in its place.
Eg:
Assume you bought Product A with the following prices on different dates:
June 1, 2023: 10 units at $10 each
July 1, 2023: 20 units at $5 each
The average cost would be ((10 * $10) + (20 * $5)) / (10 + 20) = $6.66 per unit.Now,
if you retroactively buy 5 units on June 1, 2022, the average price on
July 1, 2023, would still be $6.66 per unit. The average cost for
earlier periods is not recalculated by the system using the new
backdated purchase.
consider utilizing a different
costing approach, such as the First-In-First-Out (FIFO) or standard-
method, which expressly assigns costs based on the actual purchase order
dates, if you require exact historical cost information for specific
dates.
Hope it helps
