Compute the inventory valuation and cost of goods sold using fifo costing method¶
The manual inventory valuation method suggest that the valuation of an inventory has to be manage manually in financial accounting. The periodic journal entry has to be passed on regular internal so keep updated the valuation in balance sheet and cost of goods sold in profit and loss account.
On every regular internal an accounting entry has to be passed as below:
|Cost of Goods Sold||800|
To compute the cost of goods sold use the below formula
COGS = Inventory Valuation as per Balance sheet - Inventory Valuation
as per Inventory
Product Cost price¶
The cost price on the product page always display the cost of last unit sold or consumed or scrapped from the stock. If you change that manually it will not make any changes in the system.
Hide the product cost field, if all of your products have FIFO as the inventory costing method, even-users will never get confused.
Access the video at https://www.youtube.com/watch?v=_TFhth_Uzc4
- Compute the cost of product (standard price)
- Compute the cost of product (first in first out method)
- Compute sell price and margin based on product cost price (AVCO costing method)
- Compute the inventory valuation and cost of goods sold using standard costing
- Compute the inventory valuation and cost of goods sold using average costing method