To answer the question straight away, QuickBooks only and only offers an average inventory cost method. Though there are other inventories costing methods that are available these are not directly offered by QuickBooks or any version of it.
Which Inventory Costing Method Does QuickBooks Use to Track Inventory
So how does QuickBooks work with the average cost inventory method?
What QuickBooks does is calculate the average cost of all the items purchased in a set period of time by dividing the total cost by the total items within the said category. Thus your formula for calculating the average cost of inventory within QuickBooks will be:
Average cost = Total cost / Total number of items.
The biggest benefit of such a method is that the fluctuations within the cost are smoothed and you get uniform results, moreover there is less of a headache with using such a method.
What is the Item Cost within QuickBooks?
In order for QuickBooks to calculate the average cost for each item you would need to supply the following details:
- Number of products purchased,
- Cost of each item etc.
After supplying all this info. now you will be able to see “Cost fields” and these will be:
- Average cost: Here QuickBooks will calculate the average cost of an item. This is calculated as per the above-given formula like (total cost) / (total # items).
- Cost: This will be the recent cost of an item that you purchased an item for. It also includes the freight cost as well. Thus this column will tell you the real cost of an item purchased.
Hope you were able to get your query solved, but if you want any further info. If or are facing any issues with QuickBooks then you can get in touch with us. To give a call to us you can dial our QuickBooks Consultant number to get all your queries answered.