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Solution: Item Cost price in FirstBIT is FirstBIT is calculated according to the Weighted average cost method using a System of linear equations. The cost of each item is determined based on the weighted average cost of similar items at the beginning of the period and the cost of similar items purchased or produced during the period.
The example of average cost price calculation will be described on the below example , when Sales, Purchase, and Additional Expense Expenses are resented in the same month and Month End closing makes the equation of the item's cost price:
On December 1st, the item had the a balance - of 10 QTY. Average The average Cost Price (further ACP) is 10 AED.
Then on December 2nd, 5 qty of items have been sold. As ACP at the invoice issuing time was 10 AED the system has deducted 50 AED from item stock:
Later on, the 5 qty of items by of items by the same price have been purchased and additional expense has occurred during the purchase so the AVG became 11 AED : ((The sum of the purchase amount and additional expense by the total qty available i.e. 100+10)/10)
But as on of the time of the Sales Invoice posting the opening ACP (on at the beginning of the month) has been deducted from the stock, the system is making the equation during month-end closing and deducting the actual item cost for this sale. It's taking all stock balance balances during the month and calculates ACP, i.e. Total qty=10+5=15, total balance = 100+50+10 = 160 AED. ACP = 10,66666667 AED.
As during the sales document posting only 50 AED (10 AED per item) was deducted, the system should equalise equalize this cost, i.e. Cost correction = (10.66666667*5) - 50 = 3.333333 AED:
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