FMX now supports 4 types of inventory valuation methods:

  • fixed inventory cost (new update unit cost feature)
  • weighted average inventory cost
  • FIFO (first-in, first out)
  • LIFO (last-in, first out)

Apply the valuation method that suits your organization the best to make managing inventory costs easier and more accurate.

How does it work?

Update Unit Cost for Fixed Costs

If the inventory valuation method is set to "Fixed", you can update unit pricing within the Inventory Log. Enter the new cost in the "Transaction unit price" field and check the "Update unit price" box. This will update the item cost of all units, including previously added units. 

Weighted Average Inventory 

Inventory costs can now be averaged to accurately track the price of goods by setting your Inventory Valuation method to "Average." When adding new inventory at a new price, the total and unit costs will update based on the weighted average of the inventory pool. 

 

For example, if you have 30 units of lights on hand that were $22.10 each, and in your next shipment, you receive 10 at $25.75 each, your new unit weighted average price will be calculated at $23.01. The total inventory price will be $920.50.

 

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Initial unit price = Initial Unit Price Inventory was added to FMX at, or for future adjustments, the previously calculated average Unit Price 

Transaction unit price = The unit price of the current transaction 

Remaining unit price = (Old Unit Price * Old Quantity) + (New Unit Price * New Quantity) / Total Units 

Transaction value = New Unit Price * New Quantity 

Remaining value = (Old Unit Price * Old Quantity) + (New Unit Price * New Quantity) 

FIFO (first-in, first-out) & LIFO (last-in, first-out)

FMX also supports FIFO and LIFO.

When FIFO is used, the cost of the oldest inventory item is applied first.

When LIFO is used, the cost of the newest inventory item will be applied first. 

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For example, while using FIFO, if you have an initial filter priced at $10 and later add another filter priced at $20, the cost applied when using the next filter would be $10.

After using the $10 filter, the remaining inventory would have one filter at $20. The total value of your remaining inventory is $20, and the average weighted cost is also $20.

 

For example, when using LIFO, if you have an initial filter priced at $10 and later add another filter priced at $20, the cost applied when using the next filter would be $20.

After using the $20 filter, the remaining inventory would have one filter at $10. The total value of your remaining inventory is $10, and the average weighted cost is also $10.

How to Set it Up

To change the inventory valuation method to "Fixed", "Average", "First in, First Out (FIFO)", or "Last in, First Out (LIFO)" go to the Admin Settings.

Then, go to "Inventory Settings.

Next, select the valuation method you would like and click "Save" at the bottom. This will apply to all the inventory in your FMX site.

*Once a valuation method has been selected, the unit cost for an inventory item will not update retroactively but will be used going forward.

**Prior to this update, all FMX sites were set to "Fixed". 

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