My item has only got 1 item receipt. However, the ‘Average Cost’ and ‘Last Purchase Price’ are different
I have worked out that the ‘last purchase price’ is correct, however, our inventory valuations are based on average inventory, so need to somehow correct the average inventory
Average cost is calculated as a weighted average for on hand inventory, where Last Purchase Price only reflects the last positive inventory posting transaction (Item Receipt, Inventory Adjustment/Transfers, etc.). For example….if you have 5 units on hand at an average cost of $1.00, and then you receive another 5 units at $2.00, your average cost will become $1.50 but Last Purchase Price will show as $2.00.
You will need to find and review the transactions affecting your average cost, more than likely there is one which does not match the LPP exactly. It is possible to update the cost on historical transactions as long as the accounting period is open so you could update that with the corrected value, otherwise an inventory adjustment worksheet can “reset” the inventory cost valuation as of a specified date.
Thanks Daniel.
However, with just 1 item receipt in the system, the Average Cost should be the same as the last purchase price
Do you have any other posting transactions on this item besides an item receipt? Inventory adjustment, inventory worksheet, etc.
Agreed. Cost is calculated at the location level so I would make sure you’re seeing LPP and Avg Cost of the location vs. Item level (which is summary).
