Last Inventory Method

[eiman]

We are currently converting to Macola. We sell nutritional supplements and will utilyze Macola's lot tracking capabilities. We have been advised by one Macola consultant that the Last Inventory Method is preferable to the FIFO method. I have never heard of the Last Inventory Cost Method until now (and neither has our tax accountant) although I like its underlying theory. We have ruled out standard, LIFO and Average. Any suggestions or advise?

 

[kscheeler]

Last is the last cost you paid for something. It's stored along with standard and average cost in the item location table. I can't think of any of my clients that use last cost to value their inventory. Most use standard and a few use average.

Why have you ruled those out?

Kevin Scheeler

 

[eiman]

We are currently using Standard on our old system, but we change the standard price to the "new" price everytime we purchase more product. Mistakes are made because sometimes we change the standard to an incorrect cost. Seems like the way we use the Standard method is the same as the Last method anyway.

We don't care for the Average method because of the methodology used when product is returned to inventory. Product can be returned at a different cost from what it was originally removed from the inventory. We are not a manufacturer and merging the costs of our lots just didn't seem to fit our kind of inventory.

Do those seem valid reasons? Why aren't Macola customers encouraged to use FIFO?

 

[MacolaHelp]

If you are a distributor, you must maintain your standard cost in the iminvloc file. Do you want your inventory to be valued at the first in cost basis if you have 5 different costs for the same item on the shelf? If so, then use FIFO. You have additional data entry involved in receiving & issuing FIFO based inventory, since you must identify the layers as you go. You cannot use FIFO/LIFO with lot control, however. For most companies I work with, average cost works fine. The value of all the product on hand is updated with the latest cost plus the pre-existing cost / the new QOH. This blends the peaks & valleys of volume purchase discounts, etc. If you really want to maintain control over the cost of outgoing & incoming transactions, you can always switch to order line item costing & put in whatever cost you want at the point of sale or return.