Working with the FIFO Method in CStoreOffice®

Below how the item's cost is calculated in CStoreOffice® is taught. This is in case the FIFO method is activated for the account.

CStoreOffice® Procedure for Calculating Cost Using FIFO

For calculating the item's cost for a specific date using the FIFO method, the following procedure is applied in CStoreOffice®:

1. The system takes the following initial data:

• Cost Date - the date on which the cost should be calculated
• Item UPC - the UPC of the item for which the cost should be calculated

2. The system analyzes the item's last physical inventory to get the following data:

• Inv.Date - the date of the last item's physical inventory
• Inv.Shift - the shift of the last item's physical inventory
• Item Qty - the item's quantity based on its last physical inventory

In case the data about the last item's physical inventory is not found, the item's cost will be calculated based on its last invoice price.

3. The system identifies all invoices based on which the item in the Item Qty amount was purchased.
4. The system distributes the Item Qty value between the found invoices starting from the invoice with the earliest date.

For example, Item Qty = 20. This item was purchased based on the following three last invoices:

Invoice #	Invoice Date	Item Quantity	Unit Cost
1	01 Mar 2017	10	$3.00
2	10 Mar 2017	5	$3.50
3	20 Mar 2017	10	$3.70

Invoice Balance = 5 items at a price of $3.70.

Item Qty value is distributed between the above invoices in the following way:

• 10 items at price of $3.00
• 5 items at price of $3.50
• 5 items at price of $3.70
5. The system searches all invoices between Inventory Date and Cost Date and calculates the purchased items to get the following data:

• Invoice Date
• Item Purchased Quantity
• Unit Cost

6. The system searches all item sales between Inventory Date and Cost Date and calculates the quantity of items sold (Item Sold Quantity).
7. The system searches the item spoilage data between Inventory Date and Cost Date and calculates the quantity of spoiled items (Item Spoilage Quantity).
8. The system distributes all found data starting from the Inventory Date in the following way:

Item Qty + Item Purchased Quantity - Item Sold Quantity - Item Spoilage Quantity.

Once the FIFO method is activated for the store inventory, the above procedure works for all objects in CStoreOffice® where the item cost is calculated. For example, the item cost can be checked in the Itemized Inventory Report or Itemized Inventory by Tags Report.

Currently, in the Item Sales by Tags Report, the item cost is calculated from the average of the item's different costs for the period.
We are now working to adjust the item cost calculation formula in this report based on the FIFO method, in case the FIFO method is activated for the store inventory on the user's account.