Costing method
How your stock value and gross profit are calculated comes down to one setting: the costing method. You pick one per company.
The default is moving average. Administrators can change it.
Three options
| Method | How cost is decided | Suits companies that |
|---|---|---|
| Moving average | Calculated automatically from inbound purchase prices | buy at prices that change every time |
| Standard costing | Uses a fixed standard cost set per product | have predetermined costs |
| No costing | No amounts — quantities only | track money elsewhere, or just need counts |
If you’re unsure, leave it on moving average. It reflects what you actually paid, so the figures stay closest to reality.
Where: “Other” → “Costing method” → pick one of the three.
How each works
Moving average
- Entering a purchase unit price on an inbound updates that product’s average cost automatically.
- Gross profit on an outbound is recorded at the average cost as of completing it.
- So later changes to purchase prices don’t alter past gross profit. Once a month is closed, its numbers stay put.
Standard costing
- Set a standard cost per product (on the product edit screen).
- Gross profit on an outbound uses that standard cost.
- Changing a standard cost recalculates past reports too. Bear that in mind when you revise costs.
No costing
- Amounts and gross profit aren’t calculated — quantities only.
- Unit price fields are hidden on inbound and outbound.
- Reports show only outbound and inbound quantities, and documents print without amount columns.
The gross profit formula
Gross profit = outbound amount (sale unit price × quantity) − the cost of the stock sent out
- The cost follows whichever method you’ve chosen.
- Inbound unit prices don’t affect gross profit directly. Under moving average they’re used to update the average cost.
Common questions
Q. Gross profit isn’t what I expected A. It depends on the method. Moving average fixes the figure at the moment of the outbound, so later purchase price changes don’t move it. Standard costing does the opposite — changing a standard cost recalculates the past.
Q. There’s no unit price field A. You’re on “no costing.” Switch to moving average or standard costing to track amounts.
Q. Where do I enter purchase and sale prices? A. Not on the product — on each transaction. Inbound takes a purchase unit price, outbound a sale unit price. The only price on a product 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.
Related pages
- Registering and editing products — setting standard costs
- Inbound, outbound, move and stocktaking — purchase and sale unit prices
- Reading reports — gross profit totals