The warehouse value calculation method and the cost price of a product recorded against a job are controlled by separate settings. Check both if the amounts look unexpected.
- In the browser, open Warehouse value calculation method in the service settings. The options are FIFO and MAC (moving average cost). The selection applies to all warehouses in the environment and is assigned automatically to new warehouses. It is not changed on the warehouse’s own form.
- Also check Inventory usage principle in the warehouse settings, which controls how purchase batches are consumed. FIFO deducts products from the oldest batches and LIFO from the newest. LIFO is a usage principle, not a warehouse value calculation option.
- Review the warehouse value and when it was calculated. If you update the value, allow the calculation to finish.
- Open Product Cost Pricing in the service settings if you are investigating a cost recorded against a task or service request.
Changing the calculation method requires confirmation, and the change is applied to all warehouses. The change is blocked if a warehouse being changed has previously held products in stock. Simply reducing the current stock balance to zero therefore does not make it possible to change the method.
How is warehouse value calculated?
FIFO: the remaining products are valued using the prices of their purchase batches.
MAC (moving average cost): a shared, quantity-weighted average buy price is calculated for each product across all warehouses. An individual warehouse’s value is based on the product quantities remaining there and the products’ shared average buy prices.
The moving average cost is recalculated after a purchase or an inventory adjustment that increases the stock balance. The calculation is: (previous total quantity × previous average price + added quantity × unit price of the addition) ÷ new total quantity. For an inventory adjustment, only the added quantity is valued at the selected purchase batch’s unit price.
For example, if there are 10 units of a product in total at an average price of €5 and another 10 units are purchased at €7, the new moving average cost is €6. Sales, usage and inventory adjustments that reduce the stock balance do not themselves change the average price, but the remaining quantity affects the calculation for the next addition. Internal transfers and reservations do not change the shared average price.
If Current value per product has been set on a purchase batch line, it is used to value the remaining products on that line in both FIFO and MAC calculations.
Where can I check the average buy price?
In the browser, open Average buy prices in the product details. You can see the Current weighted average buy price, Current unweighted average buy price and Last updated time. In the unweighted average buy price, each purchase batch carries equal weight regardless of its quantity; this is different from the weighted average used in MAC calculations.
Average buy price history shows the original and current prices for each purchase batch. When a line has a change log icon, you can open the Average buy price change log to investigate the effect of, for example, a purchase price correction, a backdated purchase or an inventory adjustment that increases the stock balance. If average buy price information is not yet available, the view indicates that it will be calculated after the next purchase event.
How is the cost price selected for a product recorded against a job?
When Enable waterfall rules is selected, the first rule that matches the situation determines the price used. The order of the rules therefore matters. The options may be based on, for example, the sales price, purchase batch price or average price. Without waterfall rules, the selected Cost pricing method is used.
The cost settings Moving average cost (MAC) and Weighted average purchase in warehouse are separate options. The latter weights the purchase prices of the selected warehouse’s purchase batches by their remaining quantities. The MAC rule requires a selected warehouse whose value calculation method is MAC; the FIFO/LIFO (batch price) rule is not used in a MAC warehouse.
The waterfall rule Current value per product (batch line) requires a selected purchase batch, warehouse and warehouse slot, a current value set on the line and a sufficient remaining quantity. Zero is also a valid price: it does not cause the calculation to move on to the next rule.
Always compare the same product, location and point in time. The current warehouse value alone does not explain a cost line previously created for a job. If there is a discrepancy, also check the purchase batch’s price details and the original usage event.