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BernieJ
Level 3

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!

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17 Comments 17
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 3

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 3

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!

BernieJ
Level 3

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
Moderator

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 2

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 2

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. 

Bloff24
Level 1

Updating inventory cost and pricing when using Enhanced Inventory Receiving

Did you get an answer yet, I am in the same boat and it seems QB has no idea what we are asking.

vickif
Level 2

Updating inventory cost and pricing when using Enhanced Inventory Receiving

It sounds to me like QB doesn't know what FIFO is and its just another thing that doesn't work as intended in this system. Any other system I've used will sell the "widgets" we purchased at $5 each first and then when we run out of those it would change the inventory item cost to the new purchase price of $7. From everything I'm seeing in QB you would have to manually keep track of when you sell out of the $5 widget and then go into that item and change the cost to $7. 

That being said, to work around this non-working feature, I have started creating a duplicate inventory item with the new cost and/or retail price. Once the lower cost item is sold out I merge the two items so that the newest cost and retail price are being used. It's clunky and is less than ideal, but the only way I've figured out how to make inventory work in QB. 

User_1234
Level 2

Updating inventory cost and pricing when using Enhanced Inventory Receiving

I know this is an older conversation, but I am currently still having the same issue. When I receive an item at a new cost, but don't want it to change my current cost (since the inventory I currently have was at the old price) I would select "No." If I select "No" will that cost automatically switch to the newest cost once I am out of my older inventory that was previously set at a different price - so long as FIFO is set up in our system? 

psscale
Level 1

Updating inventory cost and pricing when using Enhanced Inventory Receiving

Sorry - still unclear.

 

This explanation makes me think that your INCOME would not be correct.  

When you check YES to update cost, all of the items in your inventory automatically jump to the cost you are paying??

So if you paid $3.00 for (10) widgets, and then you buy in (10) more widgets for $4.00 *** BUT STILL HAVE INVENTORY THAT YOU BOUGHT IN FOR $3.00... when you sell the widgets previously in your inventory (@ $3.00), your COGS on those parts shows $4.00 each - thus showing your income on that item $1.00 less than it should be because you paid $3.00 each for some of those items??... which I think FIFO means - showing cost at the oldest prices until those are depleted 

 

If you check NO - does the COGS go to the new cost once the old cost is depleted??

 

 

psscale
Level 1

Updating inventory cost and pricing when using Enhanced Inventory Receiving

The 2nd paragraph explains the YES or NO on new inventory.  

 

My understanding is that if you REALLY want a true FIFO, you select NO.  

 

If you select YES, then you are using LIFO.

 

This is very confusing & it doesn't seem correct for QB to ask you about updating the cost if you have chosen FIFO as your preference.  Seems choosing FIFO should make that question obsolete and/or incorrect.

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