Understanding FIFO Costing

sajidhanifkhan

Dear All,

I want to understand some points regarding FIFO Costing Calculation in below mentioned scenerios,

1. If we buy item x from 2 different vendor on same dates with different price?
2. If we buy item x from a vendor in different days how system will calculate COGS if it was bought in different prices from same vendor?
3. How system will know which stock is still last?
4. If we get an additional cost on item x after the sales of few quantity will it be applied to the posted sale item as well? How will it effect the unit cost?

I will appreciate your quick responses guys.

Kind regards,
Sajid

bbrown

1. The first received will be the first consumed.

2. See #1

3. Sum of Quantity on Item Ledger

4. Yes. New cost applied to original purchase will be pushed to all applied entries by adjust cost.

sajidhanifkhan

Dear Bbrown,

Thank you for quick response. Please see the attached picture. I made 2 purchases of one item first PO was 900 for qty 3 and second PO was 950 for qty 2. When I sold the item from POS it took the Cost per unit as 900 for all 4 pieces where as as per your reply it should assign 950 for the 4th piece but it did not. Could you please explain the reason or there is some thing else I need to do to assign the correct sot for the 4th piece?

regards,
Sajid

bbrown

Have you run Adjust Cost?

sajidhanifkhan

Thanks alot. It works fine after running the Adjust cost entries. Even I tried to apply additional cost it did effect on the sold qty as well. But I have to do the same excercise in different dates. Do you think it will work the same mannar in different dates as well? Please see the attachment for item ledger entries.

Thank you for your help once again.

Regards,
Sajid