Inventory workarounds and troubleshooting in QuickBooks


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Troubleshooting Average Cost

How QuickBooks Calculates Average Cost
For an inventory item, average cost is the total value of the items currently in stock divided by the quantity on hand. If you have a total Widget value of $20.00 and 10 units on hand, the average cost is $2.00 ($20.00/10).
QuickBooks uses average cost—and not another method such as LIFO or FIFO—to determine the value of your inventory.
Note: This section covers the calculation of average cost for normal and intended QuickBooks use devoid of user entry errors or data file setup errors. The rest of this topic covers the aberrations involved due to user error or changing list information and/or historical transactions.

QuickBooks recalculates average cost during normal QuickBooks use in the following ways:
·         When you record the purchase of an Inventory Part Item or the purchase of an Inventory Assembly Item. QuickBooks adds the cost of the new items to the cost of the existing stock and then divides by the total number of new and old items.

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This is the best article on QB inventory! Thanks for answering my "behind the scenes" questions.

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btw, I wish you could do an updated article for Online edition, since it's FIFO, right?

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Is there a way for that Average Cost to feed the Price you're selling those goods at?

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Joe, This article is awesome! I've been searching with no luck for the answer to why mysterious splits were being recorded under an unclassified COGS account for 3 freakin' years!!

Thanks so much for posting this.

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we adjust our inventory with manufactured product in qb daily. we use the adjust quant / value on hand function in premier QB.

we have our workers set up as a class each, and have wanted to track the retail value of the items we enter for each of their daily records to be able to be pulled out as a report so we can track their individual production. for some reason i have not been able to get qb to do this, and i think it is because i have always had adjustment type as quantity?

Still cannot figure out why qb cannot automatically tell what the retail value of these items are when we increase/adjust the quantity when there is a sales price associated with each item record?

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