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How is Cost Analyzed for Items?

I am trying to understand how Item cost is computed with the RMS system. We are using the Weighted Average method. Microsoft does not give much documentation on this however.

Some of the questions I'm trying to answer are:

1.) Does the item cost ever zero itself out? In my opinion, the cost should zero back out when the quantity of an item reaches zero as you wouldn't have any previous inventory on hand to calculate a weighted average with. Is this how the system works?

2.) How does the system deal with negative quantities? Is it still calculating item cost correctly when an item is sold while it is at a negative quantity? I know it's bad business practice to "sell" something you don't have, but it happens once in awhile.

3.) What is the best way to reset an item cost if needed. I'm not sure what can be done without wrecking the weighted average from continuing to record.

Any light someone can shed on this topic would be helpful.

Thanks in advance, Mike

Reply to
Michael Behm
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Good questions:

1.) Does the item cost ever zero itself out? In my opinion, the cost should zero back out when the quantity of an item reaches zero as you wouldn't have any previous inventory on hand to calculate a weighted average with. Is this how the system works?

NO IT DOES NOT - WHEN AN ITEM HAS ZERO QUANTITY THE WEIGHTED AVERAGE WIL BE THE COST AS CALCULATED BASED ON THE LAST PURCHASE OF THAT ITEM, HOW MANY ITEMS WHERE IN STOCK ATTHATTIME AND THE PREVIOUSCOST. THE REASON THAT COST IS NOT ZEROED OUT IS THAT IF AN ITEM IS RETURNED TO STOCK BY A CUSTOMER [REFUND] A COST NEEDS TO BE THERE TO ASSOCIATE WITH THE PRODUCT. HOWEVER, WHEN YOU BUY NEW ITEMS AND THE NEW COST IS ENTERRED BECAUSE THE QUANTITY IS ZERO THE AVERAGE COST WILL AUTOMATICALLY BECOME THE LAST COST. 2.) How does the system deal with negative quantities? Is it still calculating item cost correctly when an item is sold while it is at a negative quantity? I know it's bad business practice to "sell" something you don't have, but it happens once in awhile.

HUMMMM. YES WHEN YOU SELL STOCK THAT YOU DO NOT HAVE [BECAUSE ITEM HAS BEEN RECEIVED AND PLACED ON SHELF BEFORE IT IS UPDATED IN THE SYSTEM] THE STOCK VALUATION WILL BE INCORRECT. THERE ARE VARIOUS BUGS HAVING TO DO WITH COST THATWE HAVE FIXED AS A SPECIAL RETAIL REALM PATCH. CONTAT ME FOR DETAIL. IF YOU HAVE HQ THE ISSUE CAN BE EVEN WORSE.

3.) What is the best way to reset an item cost if needed. I'm not sure what can be done without wrecking the weighted average from continuing to record.

YES - CONTAT ME Afshin Alikhani [ snipped-for-privacy@retailrealm.co.uk] CEO - Retail Realm

Reply to
Afshin Alikhani

Thank you for your input Afshin. I'll contact you if any further assistance is needed with this matter.

Reply to
Michael Behm

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