FAQs: Vendor Price (Based on Default Vendor Price, but uses Historical Values)
The calculated cost method Vendor Price (Based on Default Vendor Price, but uses Historical Values) is one of the available calculated cost methods in Yellow Dog Inventory. It’s important to choose the best calculated cost method for your business to ensure accurate, consistent, and audit-compliant cost valuations of inventory.
Q: What client type is this cost method best suited for?
A: This method works best for operations that want their inventory’s total value calculated using the default vendor price for each item.
Q: How is the calculated cost determined for this method?
A: Vendor Price (Based on Default Vendor Price, but uses Historical Values) uses the default vendor price as the calculated cost.
- The Default Vendor price is updated during purchasing when inventory is received at a new price and a user selects to update the vendor price
- When running historical reporting, like the On-Hand report as of a previous date, the report will use the default vendor price as of that date and time as the calculated cost.
- This calculated cost method is only available globally (all store) and not at a per store basis.
Q: What are the strengths of this method?
A: Key strengths of this method include:
- Easy to understand and explain.
- Useful if you want inventory evaluations to reflect the replacement cost.
Q: What are things to keep in mind if selecting this method?
A: When using Vendor Price (Based on Default Vendor Price, but uses Historical Values) it is important to keep in mind:
- While this is important for any calculated cost method, purchasing must be enter in a consistent and timely manner to ensure accurate costing.
- Not available per store —only globally (all stores).
- If multiple stores receive the same item at significantly different prices, the resulting cost evaluation may be distorted at a store level.
- Because it relies solely on the Default Vendor Price—typically the most recent purchase cost—it typically does not reflect the true purchased value of inventory.
Key takeaway: Vendor Price (Based on Default Vendor Price, but uses Historical Values) will always use the Default Vendor Price as the calculated cost.
Related Article:
Feature Overview: Calculated Cost
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