Costing method

How your inventory value and gross profit are calculated comes down to one setting: the costing method. You pick one per company.

The default is Weighted Average Cost. Admins can change it.

Three options

Method How cost is decided Suits companies that
Weighted Average Cost Calculated automatically from Stock In unit costs buy at prices that change every time
Standard Cost Uses a fixed standard cost set per item have predetermined costs
Quantity Only No amounts — quantities only track money elsewhere, or just need counts

If you’re unsure, leave it on Weighted Average Cost. It reflects what you actually paid, so the figures stay closest to reality.

Where: “More” → company name (Company Information) → “Costing Method” → pick one of the three.

How each works

Weighted Average Cost

  • Entering a unit cost on a Stock In updates that item’s average cost automatically.
  • Gross profit on a Stock Out is recorded at the average cost as of completing it.
  • So later changes to unit costs don’t alter past gross profit. Once a month is closed, its numbers stay put.

Standard Cost

  • Set a Standard Cost per item (on the item edit screen).
  • Gross profit on a Stock Out uses that standard cost.
  • Changing a standard cost recalculates past reports too. Bear that in mind when you revise costs.

Quantity Only

  • Amounts and gross profit aren’t calculated — quantities only.
  • Unit price fields are hidden on Stock In and Stock Out.
  • Reports show only Stock Out and Stock In quantities, and documents print without amount columns.

The gross profit formula

Gross profit = Value Out (selling price × quantity) − the cost of the stock sent out

  • The cost follows whichever method you’ve chosen.
  • Stock In unit costs don’t affect gross profit directly. Under Weighted Average Cost they’re used to update the average cost.

Common questions

Q. Gross profit isn’t what I expected A. It depends on the method. Weighted Average Cost fixes the figure at the moment of the Stock Out, so later unit cost changes don’t move it. Standard Cost does the opposite — changing a standard cost recalculates the past.

Q. There’s no unit price field A. You’re on “Quantity Only.” Switch to Weighted Average Cost or Standard Cost to track amounts.

Q. Where do I enter unit costs and selling prices? A. Not on the item — on each transaction. Stock In takes a unit cost, Stock Out a selling price. The only price on an item is the standard cost.

Q. Can I change it later? A. Yes. Since it changes how gross profit and stock value come out, switching at a period boundary causes less confusion than mid-period.