Changing Valuation Methods

Changing the inventory valuation method affects how product costs are entered, calculated, and tracked throughout the system. Because each method manages costing differently, switching methods applies system-wide and may update existing costs, change how future receipts are valued, and alter the level of cost detail maintained. It’s important to understand these impacts before making a change, as they influence inventory value and reporting going forward.

Switching to Average Cost

Average cost is an inventory valuation method that calculates the cost of an item based on the weighted average of all units currently in stock. Each time new inventory is received, the system recalculates the average cost and uses that value for future inventory transactions until it changes again.

Changing to Average from Standard

Switching to Average valuation from Standard valuation affects all products across the system. The existing Standard Cost becomes the starting Average Cost, and future receipts update the inventory cost using a weighted average calculation.

Changing to Average from Specific

Switching to Average valuation from Specific affects all products across the system and removes all serial-level costs. The current Standard Cost becomes the starting Average Cost, and all serial-specific costs are permanently removed. Future receipts update the product cost using the weighted average calculation.

Switching to Specific Cost

Specific cost is an inventory valuation method that tracks the actual cost of each individual unit using serial numbers. This method ensures the exact cost of a specific item is used when it is sold or consumed, rather than using an average or fixed cost.

Changing to Specific from Standard

Switching to Specific valuation from Standard affects all products across the system. Serialized inventory is assigned the current Standard Cost, and future receipts track the cost of each individual serial number. Non-serialized inventory transitions to Average costing.

Changing to Specific from Average

Switching to Specific valuation from Average affects all products across the system. Serialized inventory is assigned the current Average Cost, and future receipts track individual serial costs, while non-serialized inventory continues using Average costing.

Switching to Standard Cost

Standard cost is an inventory valuation method that assigns a fixed, predetermined cost to each product. This cost remains constant regardless of the actual purchase price.

Changing to Standard from Average

Switching to Standard valuation from Average affects all products across the system. The current Average Cost becomes the fixed Standard Cost going forward, and future inventory transactions do not change this cost.

Changing to Standard from Specific

Switching to Standard valuation from Specific affects all products across the system and removes all serial-level costs. All products will use the Standard Cost defined in the product catalog, and any existing serial-specific costs will be permanently removed.