The Last Purchase Price inventory valuation method uses Last Purchase Price methodology to calculate transaction costs and inventory values of goods on hand.
- Open Inventory on hand and Cost for each Outlet (see Fig.1)
Fig.1 – Product Inventory tab
Referencing the Product Bin Card Report we can see the opening value of this product in the Storeroom (see Fig.2).
Fig.2 – Product Bin Card Report
Ten cases of product 1907 are received today into the Storeroom with an increased cost of $130.00 per case versus the previous $120.00 per case. The on-hand inventory in the storeroom then recalculates based on quantity received, and new cost, as seen in Fig.3.
Please note: The Restaurant and Bar inventory cost has not changed because the transaction was only recorded in the Storeroom.
Fig.3 - Product Inventory tab
Referencing the Product Bin Card Report, the Purchase Order transaction and price per unit of $10.42 are displayed with the ‘inventory cost’ displaying the average cost of the on-hand units as seen in Fig.4.
Fig.4 – Product Bin Card Report
When the Bar requisitions product 1907 from the Storeroom, and the Storeroom posts the transaction, the goods received into the Bar are recorded at the inventory value of the Storeroom which is $10.83 for Last Purchase Price. The Bar’s Product Bin Card Report then shows this update to the inventory value on hand, as seen in Fig.5 as $10.83, for the inventory cost of all on hand units.
Fig.5 – Product Bin Card Report
Referencing the Product Bin Card Report, the Storeroom also shows this transaction as seen in Fig.6.
Fig.6 – Product Bin Card Report
Please note: When posting a backdated transaction (such as Purchase Order on March 15th below in Fig.7) the cost will not update as this is not the Last Purchase Price of the product.
Fig.7 – Product Bin Card Report
During the physical inventory entry process, if the posted quantity is greater or less than the calculated system on hand, the Last Purchase Price of the product will be used to value these goods.
Please sign in to leave a comment.