Average cost calculation - Clarifications

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Posted on by Nirmala Karunarathna

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I am trying to identify the logic behind the average cost calculation.

There are two items in the item list with a unit cost of Zero. Both the items do not hold inventory. There are transactions for both items.

Item	Unit cost	Inventory	Costing method
19004	0.00	0	Average
18998	78.18	0	Average

Item 19004 average cost calculation

Item 18998 average cost calculation

What is the reason that item 19004 does not contain a unit cost, but item 18998 contains a unit cost?

Categories:

Financial Management

Inventory and warehouse management

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Jun Wang 5,659 Super User on at

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Average cost calculation - Clarifications

first and foremost, you need to make sure the costing in your BC is up to date. To achieve this, you can run adjust cost item entries. leave the filers blank, BC will true up for all items. Check your item card again to see if cost of 19004 is updated.

Even with a updated cost on item card, the unit cost is just used to calculate the total inventory value of invoiced and received not invoiced on hand inventory, so it is often misleading for users to use this number as the real unit cost.

how BC calculate real average cost for items depends on the setup on inventory setup page. Go there and take a look at the set up of . with different setup, BC has different behavior calculating the average cost of items
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gdrenteria 5,292 Super User on at

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Average cost calculation - Clarifications

Hi

You could see what settings you have in this option.

Here you have very detailed information about the calculation that is carried out, I hope it can help you a little.

Design Details - Average Cost - Business Central | Microsoft Learn

Best regards

Gerardo