Method of updating average price

  • Purchases (Cum)

    The average purchase price is based on the following:

    • The price of a new receipt.
    • The average price of the cumulated purchases up to the time of the new receipt.
          
APN = ((PR * QR) + (APO * CRO)) ÷  (QR + CRO)
  • Current Inventory

    The average purchase price is based on the following:

    • The price of a new receipt.
    • The average price of the current inventory.
          
APN = ((PR * QR) + (APO * ILO)) ÷ (QR + ILO)
  
    APNAverage purchase price (new)
    APOAverage purchase price (old)
    PRPrice of the new receipt
    QRQuantity of the new receipt
    CROCumulative receipt quantity (old)
    ILOInventory level (old)

    Old (current) inventory considers the existing inventory on hand minus the not yet matched and approved receipts. Consequently, the average purchase price is based on financially matched and approved purchase orders.

    If the method is set to Current Inventory and the APN calculation outcome is negative, the average purchase price receives the same value as the latest purchase price.