| Method of updating average priceCumulative Purchases The average landed cost 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 landed cos is based on the following: - The price of a new receipt.
- The average price of the current inventory level.
APN = ((PR * QR) + (APO * ILO)) ÷ (QR + ILO)
APN | Average landed cost (new) |
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APO | Average landed cost (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 cost
is based on financially matched and approved purchases. If the method is set to Current Inventory and the APN calculation outcome is negative, the average
landed cost is equal to the latest landed cost.
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