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In general, costing method are the way that is used by businesses to determine the final product’s total cost. In Financio, there are two costing methods you can choose from.
First In First Out (FIFO) – The concept of the FIFO method assumes products are sold in the order they're added to the inventory. Meaning, first products in stock are the first to be sold. The costs paid for those oldest products are the ones used in the calculation. This method best suits businesses such as restaurants, bakeries and butchers because the products have a shelf life.
Average cost– The average cost concept uses a weighted average to track inventory. With this method, you use a pool of cost for all units of a particular stock keeping unit. Any purchase is added to the pool of cost, and the pool of cost is divided by all units you have on hand.
Note: Average cost is only available on Financio Premier.
How to setup the costing method?
- Go to Control Panel.
- Click on Business Setting.
- Select the costing method that you would like to use.
- Click Save.