Cost Basis

For each of the cost fields for a product, select a cost basis. When selecting a cost basis for accounting purposes, this is the cost associated with a sale, return, or transfer of products.

Note The only valid cost basis for accounting purposes are Average, LIFO, FIFO, and Standard.

Cost Basis	How Updated	Description
Average	Receiving Entry	This is the weighted moving average cost.
LIFO	Receiving Entry	This is the last-in, first-out cost.
FIFO	Receiving Entry	This is the first-in, first-out cost.
Standard	Inventory Cost Adjust Product Location Maintenance	This is a manually-maintained cost, set up initially for products. Note If standard cost is chosen for the accounting cost, after the product is set up, standard cost changes must be made in Inventory Cost Adjust because of the general ledger implications.
Burden	Product Location Maintenance	This is a manually-maintained cost with no accounting implications, generally used for sales or commission gross margin purposes. For additional functionality information, see Burden Cost Maintenance.
Last	Receiving Entry	This cost is automatically updated based on the most recent receipt of the product.

Example Cost layers are built every time a receipt is recorded.

FIFO / LIFO Layer#	Receipt Date	Receipt Quantity	Landed Cost	Cost Layer	Average Cost	Total Cost
1	5/10/2020	1,000	$ 2.00	$2,000.00	$ 2.00	$2,000.00
2	6/5/2020	1,000	$ 3.00	$3,000.00	$ 2.50	$5,000.00
3	7/7/2020	1,000	$ 4.00	$4,000.00	$ 3.00	$9,000.00

As sales are recorded, the cost associated with the sale is dependent of the cost basis selected.

Sale Date	Sale Qty	Average Cost	LIFO Cost	LIFO Layer	LIFO Layer Quantity	FIFO Cost	FIFO Layer	FIFO Layer Quantity
9/9/2020	800	$2,400.00	$3,200.00	3	800	$1,600.00	1	800

11/2/2020	300	$ 900.00	$ 800.00	3	200	$ 400.00	1	200
			$ 300.00	2	100	$ 300.00	2	100
	Total 11/2/2020		$1,100.00			$ 700.00