The valuation rate of an item is determined by considering all expenses associated with making the product available for sale, including freight, labor, raw material costs, and more.

In BizCentric, the valuation rate is computed according to the chosen valuation method for each specific item.

Each item can be assigned either FIFO or Moving Average as its valuation method.

Consider the following example to know how it impacts your stock:

Calculating Valuation Rate at the time of sale:

Using FIFO (First In, First Out):

Since we use FIFO, we’ll sell items from the earliest transactions first. To make a sale of 20 units, we’ll take 15 units from the first purchase and 5 units from the second.

(15 * 50) + (5 * 70) = 1250, leaving 20 units in stock at a cost of 70, totaling 1400.

Using Moving Average:

In the Moving Average method, the value of items is recalculated with each acquisition. We add the cost of newly acquired items to the existing inventory’s value and divide by the total quantity available.

((15 * 50) + (25 * 70)) / 40 = 62.50

To make a sale of 20 units, we’ll directly multiply by the average value.

20 * 62.50 = 1250, leaving 20 units in stock totaling 1250.

Although the quantities remain the same, the stock values differ, yet both sum up to a total of 2500.