When item on-hand quantity goes positive, it's all right with the (Beginning inventory cost + Current purchase cost) / (Beginning inventory units + Current purchase units) formula.
But I am just curious when on-hand quantity goes negative or zero, will RMS still computed item cost with the formula above?
Assume that we have in stock 3 hammers that cost $10.00 each, then we sale 6 hammers at POS, and we then order 6 more hammers that cost $12.00 each.
Any ideas?