Compute the cost of product (first in first out method)¶
The fifo costing method help you to compute the accurate profit in the profit and loss account based on the all the purchase expense and sell price. You can add the landed cost (the cost of transportation) if you do a real time inventory valuation with fifo costing method. Each time you remove the products from warehouse the cost will be computed on the product Cost field
- Install Sales Management, Purchase Management & Accounting and Finance apps
- Create a product Laptop
- Set the Internal Category to All / Saleable
- Set Costing Method to Average Cost (AVCO) on All / Saleable category
- Define Default Supplier as a vendor with the cost price of Laptop.
- Purchase 3 unit of Laptop at different rates, the product will be computed on each reception by doing an average based on the purchase price.
The FIFO is same as the Real price costing, follows the accounting FIFO and not forcing for warehouse FIFO removal strategy.