Cost of Sales
Table of Contents
AccountEdge uses the Weighted Average Cost method to calculate the cost of sales for an item.
Total Item Value divided by Total Item Quantity On Hand = Weighted Average Cost
((number of items purchased * one_cost) + (number of items purchased * another_cost)) / (total number of items) = Weighted Average Cost
Example:
| Number of Items Purchased | Unit Cost | Extension | |
|---|---|---|---|
| 450 | $12.75 | $5737.50 | |
| 100 | $11.95 | $1195.00 | |
| Total | 550 | $6932.50 | |
| Average | $12.35 | ||
| Weighted Average | $12.60 |
Average = ($12.75 + $11.95) / 2 = $12.35
Weighted Average = ($5737.50 + $1195.00) / 550 = $12.60
If you need to adjust the cost of the an item this support article explains how to do so.
Cost of Sales Adjustments
Negative inventory or purchase orders that haven't been converted into bills may cause cost of sales adjustments to be automatically recorded. Click her to learn more about these cost of sales adjustments.