Inventory Cost Methods

By Caresse | Updated

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Please note that when the costing method (Average, FIFO, LIFO) is changed on an item, Inventory information on the Product/Ingredient Inventory Summary Reports gets reset. This means that in addition to resetting the Cost and Qty of the item, the historical data for the item on the Product/Ingredient Inventory Summary is also reset. However, this does not affect Product/Ingredient Inventory Log report. 

Revel allows you to use Average, Last in First Out (FIFO) or First In First Out (FIFO) costing to track your inventory values. After conducting sales, view the cost of goods sold under the Product Mix report. Below is a brief explanation of the different costing methods:  



Average

This method takes the average cost of all inventory count put in for a specific item, regardless of the date or cost entered. 

For example if you received 10 apples on Monday costing $.10, and 10 apples on Tuesday for $.20, and sell 5 apples, your reporting will show that your cost of goods sold will be $0.15 cents each. 

Screen_Shot_2018-08-14_at_4.02.48_PM.png 


FIFO

FIFO stands for First In, First Out. FIFO takes the materials purchased cost first, as the cost of goods sold and the cost of materials purchased last as the cost of items still present in the inventory. The inventory count/cost will leave in the same order that the inventory was added.

For example, let's say if you received 10 apples on Monday costing $.10, and 10 apples on Tuesday for $.20. When you proceed to sell 5 apples, your reporting will show the cost of goods sold to be $0.10 cents per Apple. 

Screen_Shot_2018-08-14_at_4.17.29_PM.png 


LIFO

This method stands for Last In, First Out. LIFO takes the cost materials purchased most recently as the cost of goods sold and the cost of materials purchased first as the cost of items still present in the inventory. The inventory value will be removed from inventory count according to the amount that was last recorded. 

For example, let's say you received 10 apples on Monday costing $.10, and 10 apples on Tuesday for $.20. If you proceed to sell 5 apples, your reporting will show the cost of goods sold for these 5 Apples to be $0.20 cents each. 

Screen_Shot_2018-08-14_at_4.20.12_PM.png

 

Revel's defaults your inventory cost to the FIFO method. If you would like change this costing method, please contact our support department.

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