Quick Reference: Calculated Cost Method Comparison
Below are examples showing how calculated cost is determined for each available method. In some cases, the actions in the tables vary slightly to highlight the key differences between methods.
FIFO
FIFO ensures the oldest costs are matched to sales first, leaving you with the most recent inventory values.
Weighted Average Cost
Weighted Average Cost takes the average of all purchases divided by the quantities received to determine the calculated cost.
Perpetual Weighted Average Cost
Perpetual Weighted Average Cost recalculates the average unit cost after each transaction by dividing the total cost on hand by the total units on hand.
Historical Weighted Average Cost
Historical Weighted Average Cost functions similarly to Weighted Average Cost, the only different is the calculated cost does NOT reset when inventory reaches zero on hand.
Vendor Price (Based on Default Vendor Price, but uses Historical Values)
Will always use the Default Vendor Price.
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