Hi stevecoles64 , my suggestion would be to investigate how to include such charges (freight, psc etc.) in each purchase, so that your inventory is correctly valued from the start. Then you can continue using average cost and the valuation basis will be GAAP compliant.
Thanks Mike. You've hit the nail on the head.
I'm not the accountant, I'm just the sales manager trying to get an accurate GP report on sales.
Right now all of our inventory is undervalued because it only includes the original supplier's invoice cost, not the Port Charges, Customs Agent Fees etc.
The accountant can't work out how to include costs from various sources into an Inventory Item. My idea was to change to a Standard Cost with a factor to cover the other costs, but that may not be the answer we need. It won't be 100% accurate but better than we have now and good enough for Sales/GP reporting.
Is there a right way to capture all of the costs in the Item?
Thanks Mike. I think that's the answer. I'll go through it with our internal accountant today.
Thanks for your help.
