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BernieJ
Level 2

Updating inventory cost and pricing when using Enhanced Inventory Receiving

When entering a purchase order for an inventory item that has a new price, a box pops up asking if you want to update the cost and price of the item.  Is it best to select no if you are using FIFO costing? 

 

For example:  You have 10 widgets in stock that you paid $5/pc so the current cost for the widget is $5/pc.  You then buy 10 more at $7/pc.  If you select "yes" to update the cost, will Quickbooks change the cost of the orignal 10 widgets from $5 to $7 (meaning all 20 widgets in stock will now be costed at $7/pc)?  If you select "no" so the cost is not undated, then will Quickbooks keep the first 10 widgets costed at $5/pc and assign the newly purchased widgets costed at $7/pc?

Solved
Best answer March 25, 2020

Best Answers
Rose-A
Moderator

Updating inventory cost and pricing when using Enhanced Inventory Receiving

Greetings, BernieJ.

 

Yes, it will affect if you select the Yes or No option when turning on the inventory feature in QuickBooks Desktop. Selecting "Yes" can affect your cost from the previous parts, while selecting "No" will stay as-is.

 

Here are some interesting articles to learn more about the FIFO feature and how it works in QuickBooks Desktop:

 

Feel free to get back to me if you require more information about this. I'd be more than willing to provide additional assistance. Have a good one and stay safe!

View solution in original post

12 Comments
Steve_C
QuickBooks Team

Updating inventory cost and pricing when using Enhanced Inventory Receiving

Hey BernieJ. Thanks for reaching out to the community. If you have FIFO inventory tracking selected inside of your company preferences then this won't affect your inventory negatively. 

However this can cause issues if you may have cost averaging selected instead. I'll list the steps for you to check bellow

  1. Select Edit in the top left then Preferences at the bottom
  2. From the left menu, select Items & Inventory, then choose the Company Preferences tab at the top
  3. Select Advanced Inventory Settings, then choose the FIFO tab.
  4. Select Use FIFO starting on and choose a date.

    Note: QuickBooks recalculates all inventory-related transactions starting on the date you enter. You can start tracking FIFO on any date. If you decide to turn off FIFO later, uncheck Use FIFO starting on, and QuickBooks will once again calculate inventory value using the average cost method.

  5. Select OK then OK again to close the Preferences window.

You may also want to check out our article on FIFO Options in QuickBooks Desktop Enterprise. Let me know if you have any other questions, let me know I'm happy to help. 

 

 

BernieJ
Level 2

Updating inventory cost and pricing when using Enhanced Inventory Receiving

Hi Steve,

We do have FIFO inventory turned on.  Let me make sure I understand correctly... with FIFO inventory turned on, it does not matter if we select yes or no to update the cost when the box pops up on a new purchase.  Selecting yes or selecting no will not affect the cost of previously received parts.  Is that correct?

BernieJ
Level 2

Updating inventory cost and pricing when using Enhanced Inventory Receiving

Also, when I click on the link to the article in your response I get a message that the website cannot be reached.  Is there another place to find that article?

 

Thank you,

Bernie

Rose-A
Moderator

Updating inventory cost and pricing when using Enhanced Inventory Receiving

Greetings, BernieJ.

 

Yes, it will affect if you select the Yes or No option when turning on the inventory feature in QuickBooks Desktop. Selecting "Yes" can affect your cost from the previous parts, while selecting "No" will stay as-is.

 

Here are some interesting articles to learn more about the FIFO feature and how it works in QuickBooks Desktop:

 

Feel free to get back to me if you require more information about this. I'd be more than willing to provide additional assistance. Have a good one and stay safe!

View solution in original post

BernieJ
Level 2

Updating inventory cost and pricing when using Enhanced Inventory Receiving

Thank you.  I figured we would need to select "no" in order to keep the previous parts costed at the old cost but I wasn't completed sure.

 

Much Appreciated

Tori B
QuickBooks Team

Updating inventory cost and pricing when using Enhanced Inventory Receiving

You're welcome, @BernieJ.

 

Thank you for letting us know that the steps provided by my colleague helped to resolve your issue. 

 

You can always reach out to us here in the Community anytime you find you have questions or concerns. We will be here for you every step of the way. Take care and have a great rest of your week. You certainly deserve it! 

 

Plus2
Level 1

Updating inventory cost and pricing when using Enhanced Inventory Receiving

I am NOT using QBO Enterprise and want to make certain I understand correctly.  I want to make a price adjustment of inventory items for the new year.

 

I do NOT want it to affect items/cost previously used.  I merely want to adjust price for itmes COGS going forward.

Ryan_M
QuickBooks Team

Updating inventory cost and pricing when using Enhanced Inventory Receiving

Hi @Plus2,

 

Thank you for joining the thread. I'll answer this query for you about COGS adjustment in QuickBooks Desktop (QBDT). 

 

In QBDT, you can follow the steps provided by my colleague @Rose-A above. Keep in mind though Choose No instead of Yes.

 

If you're referring to QuickBooks Online (QBO), then you can proceed with updating the COGS directly. There isn't an extra step required. Most, if not all changes are applied moving forward. So it meets your needs of only applying the new COGS for the next year. 

 

In case you have QBO, refer to this article for additional details about COGS: What is FIFO and how is it used for inventory cost accounting?

 

You can rest assured, we always have your back here in the Community. Post a reply if you have other questions, and I'll take care of them.

vickif
Level 1

Updating inventory cost and pricing when using Enhanced Inventory Receiving

I don't see that the question was answered. If we have FIFO and receive an item in at a different cost than the current inventory is at, if we select "no" to update cost, will the system change the cost when it gets to the new inventory received?

SarahannC
Moderator

Updating inventory cost and pricing when using Enhanced Inventory Receiving

Hello there, vickif.

 

I'll make sure to provide additional details about selecting No to update cost in QuickBooks.

 

When you select No, the change will only be applied for a specific transaction that was created. Those transactions you've selected No for the item. With that, it will not directly change the cost for all newly inventory is received. Still, you can check these resources for additional information and tips about this feature:

 

 

Visit again if you have additional questions. Take care always.

vickif
Level 1

Updating inventory cost and pricing when using Enhanced Inventory Receiving

I know what FIFO is. The question is whether or not QB will change the cost in the inventory item when the previous supply of inventory at the lower cost is used up. Example: we have 10 items at a cost of 3.18 and receive in 10 more at a cost of 3.20. When those 10 at 3.18 are used, will the inventory item show the correct cost of 3.20 on the remaining 10 in stock?

katherinejoyceO
QuickBooks Team

Updating inventory cost and pricing when using Enhanced Inventory Receiving

Thanks for coming back with more detailed information of your concern, @vickif

 

As mentioned by my peer Rose-A in her previous response, the cost from the previous parts will be affected when you select the Yes option. 

 

Hence, changes made in an inventory item will be applied moving forward to any transactions. And it will also use the current cost you've set up for an item. 

 

For future reference, you'll want to check out this article to know more about using the Price Rules feature in QuickBook: Use Advanced Pricing.

 

Feel free to visit and post some more of your concerns. We're always delighted to assist. 

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