| Method of updating average pricePurchases (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)
APN | Average purchase price (new) |
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APO | Average purchase price (old) |
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PR | Price of the new receipt |
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QR | Quantity of the new receipt |
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CRO | Cumulative receipt quantity (old) |
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ILO | Inventory level (old) |
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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 result of the APN calculation is negative, the
average purchase price receives the same value as the latest purchase price.
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