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BernieJ
Level 2

Inventory Costing (FIFO vs Average Cost)

When setting up a new company, we selected the FIFO inventory costing option, but Quickbooks seems to be costing items using the Average costing.  Is there something else we need to click to have QB cost items using FIFO?

 

Quickbooks is also using Average costing

Solved
Best answer February 25, 2020

Best Answers
Mark_R
QuickBooks Team

Inventory Costing (FIFO vs Average Cost)

Hello there, @BernieJ.

 

You'll want to make sure that the starting date of the FIFO is prior to the transaction dates. Let me provide additional information about Average Costing vs FIFO.

 

QuickBooks will depend on the start date you've selected when switching to FIFO. Those items used before the start date of the FIFO will fall under the Average Costing.

 

Any existing balances of items on hand at the date that FIFO is enabled are placed into one costing layer. Also, please know that the report only includes balances and transactions from the date of when FIFO began.

 

For additional information, feel free to check out these articles:

 

You might also want to read this article to know how QuickBooks tracks inventory: Understand inventory assets and cost of goods sold tracking.

 

Please know that you can always get back to here in the Community if you have any other questions. I'll be standing by for your response. Have a great day.

View solution in original post

8 Comments
Mark_R
QuickBooks Team

Inventory Costing (FIFO vs Average Cost)

Hello there, @BernieJ.

 

You'll want to make sure that the starting date of the FIFO is prior to the transaction dates. Let me provide additional information about Average Costing vs FIFO.

 

QuickBooks will depend on the start date you've selected when switching to FIFO. Those items used before the start date of the FIFO will fall under the Average Costing.

 

Any existing balances of items on hand at the date that FIFO is enabled are placed into one costing layer. Also, please know that the report only includes balances and transactions from the date of when FIFO began.

 

For additional information, feel free to check out these articles:

 

You might also want to read this article to know how QuickBooks tracks inventory: Understand inventory assets and cost of goods sold tracking.

 

Please know that you can always get back to here in the Community if you have any other questions. I'll be standing by for your response. Have a great day.

View solution in original post

BernieJ
Level 2

Inventory Costing (FIFO vs Average Cost)

Hi Mark,

Yes, I understand FIFO costing versus Average costing in principle.  I'm having a hard time figuring out what Quickbooks is doing and I'm thinking there may be a setup item I don't have set correctly.  I set the FIFO date as 01/01/2020.  

 

When I build an assembly (with a 02/24/2020 date) using inventory items, the new Inventory Assembly Screen will accumulate the cost of the assembly based on the costs of the items used in the assembly.   However, when I use or view the new assembly that is built, is shows an average cost which is what is posting to inventory/COGS.

 

 

 

BernieJ
Level 2

Inventory Costing (FIFO vs Average Cost)

I tried to do a screenshot to show you what I mean, but since we are using Quickbooks Enterprise via cloud-hosting I cannot take a screenshot.  Below is what I see on the Inventory Summary for one of the Assembly Items...

 

Assembly Item:  R-Timmons-Stock

 

    Calculated Average Cost:  63.32

Cost:  141.20

Sales Price:  141.20

 

BernieJ
Level 2

Inventory Costing (FIFO vs Average Cost)

I think I may have figured it out.  I changed the FIFO beginning date to 01/01/2019 and then Quickbooks went through a process with a status bar to change to FIFO.  For some reason, Quickbooks never did that setup when I chose FIFO costing and used the 01/01/2020 date.

 

jbyrne210
Level 1

Inventory Costing (FIFO vs Average Cost)

Hi, is it possible to adjust the FIFO date back to the start of the company file and have the FIFO accounting run forward for items assembled and sold? A support rep told me it was and after refreshing the file I see some costs changed but not the ones in future periods I had anticipated. Please help

Tori B
QuickBooks Team

Inventory Costing (FIFO vs Average Cost)

Hey there, @jbyrne210

 

Thanks for reaching out to the Community for support. I hope you're having a great day so far. I'm happy to lend a hand with changing your FIFO date. 

 

Great news, you can adjust your FIFO date back to the start of the company file. To do this, you'll need to go into your Preferences to adjust the date. I've included some steps to walk you through the process below. 

 

  1. From the Edit menu, choose Preferences
  2. Tap on Items & Inventory on the left side, then click on the Company Preferences tab. 
  3. Hit Advanced Inventory Setup
  4. Select the FIFO tab, then adjust your date. 

That's all there is to it. Check out FIFO Options in QuickBooks Desktop Enterprise for more details about this process. 

 

Please let me know if you have additional questions or concerns. I'll be here every step of the way. As always, feel free to reach out to the Community any time you need assistance. Take care! 

 

 

jbyrne210
Level 1

Inventory Costing (FIFO vs Average Cost)

Thanks for the reply. The steps are helpful and I did that. I noticed that the COGS for previous periods changed slightly, however, after deleting and redoing the inventory assembly build the cost assigned to items is still not using FIFO. What should I try next?

 

 

Candice C
QuickBooks Team

Inventory Costing (FIFO vs Average Cost)

Good afternoon, @jbyrne210

 

Thanks for reaching back out to the Community. I appreciate you coming back and telling us what you did to help resolve the FIFO problem. 

 

Since the steps didn't help that my colleague provided above, I recommend contacting our Customer Support Team. They'll be able to use a screen share tool to help walk you through some additional steps. Here's how: 

 

  1. Go to the Help menu. 
  2. Pick the QuickBooks Desktop Help option. 
  3. Click the Contact Us hyperlink. 
  4. Give a brief description of the problem and tap Let's Talk
  5. Scroll down and choose to Get a callback

 

That's all there is to it! 

 

Let me know how it goes. I want to make sure that you're able to get back to running your business. Should you need any further assistance, don't hesitate to ask. I'm only a post away if you need me. Have a great day!

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