Average Cost Method

Hi all
- I'm starting a test for an average cost method Organizations, (Inventory,Purchasing ,Order Management)
-Is it necessary to enter the receipts and issues day by day to keep the Financial Transactions posted from the issue by correct averge cost calculated
as i know the Issuing Txn is:
Dr : COGS (Item Qty * Average Cost Calculated)
Cr : INV (Item Qty * Average Cost Calculated)
Regards
Amr Hussien

Since you are using average costing, time has impact. for example, If you have PO for an item with 2 different Prices.PO1 and PO2. Once you receive the PO1, your average cost is to be based on PO1.so if you delayed the receipt, the true cost is not reflected for the txn occurred on the day at which PO1 is received. Similarly assume that if you receive PO2 , and making entry of PO1 and PO2 in the same day. The average cost is calculated on the day of entry. But the cost is not reflected for the transactions that were done earlier to the receipt of PO1PO2. In this case, your objective of using average cost is lost. So it is necessary to receive the Items into stock as quick as possible.(Set dead lines for inspection, receiving into stock..etc),
thanks,
dr

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Average Cost Method

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