Many people ask how the average cost for an item is calculated, and if you have multiple locations, this might be something you’ve wondered about. Average cost in Retail POS is defined as the perpetual, weighted average of the cost of a product's quantity of stock on hand (sellable inventory + reserved + inventory in-transit) across all locations in an account.
The calculation for average cost occurs and updates in the following situations:
- When items are received from a purchase order
- When the item’s unit cost and/or quantity on hand is updated manually
- When performing a vendor return
- When performing an inventory import that includes quantity on hand and cost information
If you have more than one store or location, then the average cost may differ between the inventory item’s details section and the Inventory asset report. From the main menu in Retail POS, go to Inventory > Item search and select the item. The average cost shown in the Stock section is the average cost of the item for all locations.
To run inventory reports, go to Reports > Assets. Here, you can search for the item to run an updated report and view the average cost of this item by store, or by all locations. By default, it shows the item’s information for the store you’re currently logged into. If you want to see the details for other stores, or for all locations, select the Advanced button and make your preferred selection.
In the following example, one location is selected so it shows a different average cost than it does in the previous above, which includes all locations. Also, note the in-stock amount differs under the Remaining heading.
Another consideration is that one store may have a different cost for the same item than another store, which is often the case. The item’s cost can fluctuate depending on the vendor’s pricing, which obviously affects the average cost over time.