- The article discusses the importance of inventory costing for businesses that trade physical products.
- Business Central supports multiple inventory costing methods, including FIFO, LIFO, Average, Specific, and Standard.
- The default inventory costing method in Business Central can be overridden by individual item costing methods.
- It is important to ensure that the chosen inventory costing method complies with local accounting standards.
- FIFO assumes that the first items received in inventory are sold first and is often used when product costs are stable.
- LIFO assumes that the last items received in inventory are sold first, but it is disallowed in many regions.
- Average costing calculates the unit cost as the average cost at each point in time after purchase and is preferred for unstable product costs.
- Specific costing is used for easily identifiable items with high unit costs that are tracked with serial numbers.
- Standard costing is based on estimates and is commonly used in discreet manufacturing to account for material and overhead costs.
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