Cost Methods

This FAQ will go over the different costing methods for inventory items. Cost methods can be chosen by going to the general tab of an item, clicking the pencil icon beside the cost method field, and selecting one from the dropdown list. Cost methods are typically set to the same value for all items.

The cost method controls how the cost of an item will be calculated when posting a sale/usage transaction.

Average Cost

Average cost is the total value divided by the total stock. More information on how it is calculated can be found here: Average Cost Calculation

FIFO (First In, First Out)

Inventory with the oldest receiver date will be relieved first.

LIFO (Last In, First Out)

Inventory with the newest receiver date will be relieved first.

Lot Cost

Lot-tracked products should typically be set to FIFO, which causes them to use the actual cost of the sold lot.

Special Order

This cost method uses just the cost from the “Standard Cost” field, and is not based off of average cost or when it was received.