Configure the Inventory Calculation Method

Inventory can be calculated in four different ways. Click on the menu on the left: Inventory > Configurations > Configurations.

Select the Inventory Calculation Method:

• Cost in the product file;
• Average cost;
• First in, first out (FIFO);
• Last in, first out (LIFO).

Click on Save.

1. Cost in the Product File

On the menu on the left, click on Inventory > Products and Services. Choose the product you want. 

In the Purchases tab, you will see the options cost price, next cost and next selling price.

Note: the system will calculate the next cost, but you must enter the cost price.

2. Average Cost

The cost is calculated as follows, for example:

- in January, winter tires were purchased for $100 each,

- in February, the product cost 200 dollars,

- in March, the cost reached 300 dollars.

Using the average cost option, these values are added together and divided by three to obtain the average:

100 + 200 + 300 = 600/3 = 200.

The system has calculated that the next cost will be 200 dollars for this product.

Note: the system will calculate the next cost, but you must enter the cost price.

3. First In, First Out (FIFO)

In this method of inventory calculation, products purchased first must be sold/used first.

For example: winter tires were purchased in January, February and March. The first to be sold must be those purchased in January. When they are sold, the tires bought in February will be used, and so on.

4 Last In, First Out (LIFO)

In this method of calculating inventory, products purchased last must be sold/used first.

For example: winter tires were purchased in January, February and March. The first to be sold should be those purchased in March. When they run out, tires bought in February and then January will be used.