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Learn how QuickBooks Commerce calculates product cost (MAC)

SOLVEDby QuickBooks4Updated November 15, 2022
QuickBooks Commerce is no longer available for purchase as a stand-alone product.
The features referred to in this article are only relevant for customers who still have QuickBooks Commerce bundled with their QuickBooks Online subscription.
If you want to learn more about e-commerce accounting features that are part of QuickBooks Online, check out Accounting for e-commerce FAQ.

Learn how QuickBooks Commerce calculates product cost.

QuickBooks Commerce uses the “moving average cost” (or MAC) method to calculate and update product cost every time you add more to your inventory. Here’s how it works.

Learn how moving average cost in QuickBooks Commerce works

When you purchase new stock, QuickBooks automatically calculates the moving average cost of the items you replenish.

To get the moving average cost, QuickBooks calculates the sum of the total value of your stock on hand (before the purchase) and the total cost of the additional stock. Then, it divides the sum by the final quantity on hand. The result of this equation is an item’s moving average cost.

The cost of an item typically stays the same if you purchase more of it at the same price per piece. If you buy more of an item at a different price each, the moving average cost changes.

Take a look at this example to get a better idea of how the moving average cost method works. 

DateQuantity on handTotal inventory valueMoving average cost (per item)
April 1: You had 10 baskets in your inventory with a calculated average cost of $5 each.10$50$5
April 5: You sold 5 baskets from your stock, so you have 5 remaining.$25 $5
April 10: You purchased 50 more baskets for $6 each. 
Since you purchased more baskets at a different price each, QuickBooks updates the average cost per item.
QuickBooks calculates the sum of the inventory value of your baskets before the purchase ($25) and the total cost of the new baskets  ($300). Then, it divides the sum ($325) by the final quantity of baskets on hand (55). This means that the average cost of each basket as of April 10 is $5.90.

Note: QuickBooks calculates your product cost using the base currency in your company file, even if the order is in a foreign currency.

Check your products’ current average cost

You can create reports to track down each item's average cost.

  1. In QuickBooks Commerce, go to Intelligence.
  2. Select Inventory, then Stock on hand.
  3. Note: The moving average cost shows in the report as MAC.

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