# Inventory Average Costing
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The system caters for
1
average costing
2
latest costing methods
Average CostingAverage costing is worked out by the number of stock items coming into the system with a value. This value is posted to the general ledger books to your stock ledger account and Creditors control account. When the next Goods Received Note with stock comes in, the value of the incoming stock and quantity is worked out. The existing stock quantity and value is multiplied to give you a value and the new value from the Goods Received Note is added together and then divided to give you the new average cost of the item.Looking at the table below the average cost of the item is worked out each time stock comes in based on quantity and value. If the user does not back date any GRV or revalue the stock, one can work out the average cost of the item in excel and in history sorting by audit date and time.If a stock value adjustment has been made, the system will work out from the last stock value adjustment.png)
Total Line Value =
QTY x Unit Value
Total Value =
Previous Total Value + New Total Line Value
Total QTY =
Previous Total QTY + New Line QTY
Ave Cost =
Total Value / Total QTY
##### Average Costing TestWhen working out the average unit cost.png)
Checking the stock value.png)
Inventory valuation report.png)
Quantity on hand check.png)
Inventory movement check.png)
Document related transactions check.png)
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Item check.png)