Subject Re: [firebird-support] average cost price
Author Peter Sanders
Hi Maya

On Tue, 2 Nov 2004 17:15:57 +0200, Maya McLeod <maya@...>

> Yay, someone else in the same boat as me, to share my frustrations!
> Misery loves company ;-)

Ahhh, so I'm not alone :D

> Have been researching this for the past month, and this is what I have
> found: In accounting terms
> A *moving average* is affected by the current level in stock when the
> goods are received.
> A *weighted average* is the total qty of goods available for sale that
> year, divided by the qty of goods available for sale that year.
> (I can include some equations if you like)

I don't know whether I *want* equations :D, though it may be useful.

> What I'm still trying to figure out, is if the 'correct' way of doing
> the weighted average is 'by year', or 'by month'.

Like you I have not decieded on a specific "correct" way. The correct way
may be more effort than is needed. This can depend on the amount of stock
turned over I guess.

A relatively slow stock turn would not necessarily influence the variation
in cost price over a shorter period of time, as would a relatively static
cost price. Perhaps the period you choose could be influenced by the stock
turns and variation in cost price.

> One web site complained that all computerised packages calculate it
> monthly, which they disagree with, but I've been unable to find any more
> info on that yet.

I currently use the last five purchase prices as the stock turn for most
of the products sold by my customer is slow. This is acceptable for their
needs, so far.

> Hope this helps.

Thank you

> For example goods may be purchased in bulk when on special, and sold at
> normal or discount price. The quantity of goods on hand prior to each
> purchase of new stock do have some bearing on the average price, though
> this (AFAIK) is not normally taken into account.
> I think this is "moving averages". Not being an "accountant" type :D I
> thought I would seek advice here.

Kind regards

Peter Sanders