Most Recent Cost Costing Method
Most Recent Cost. When you ship units from a location using this costing method, Inventory Control assigns the cost of the most recently acquired unit at the location to all units shipped. Consequently, the units on hand in the closing inventory are assumed to be from the oldest acquisitions.
The program uses weighted moving average to value inventory when the costing method is most recent cost.
To determine the total cost of a shipment, the program multiplies the number of shipped units by their most recent cost at the location.
The program records the difference between the most recent cost and the average cost in the cost variance account of the category being used for the shipment. (The average cost is the total cost of units on hand divided by the total number of units on hand.)
Warning! If you ship units of an item for which you have not yet received any stock or entered a most recent cost, Inventory Control calculates the cost of goods sold using a most recent cost of zero.
You can change the most recent cost of an item at a location at any time.
See also
First-in, first-out (FIFO) costing method
Last-in, first-out (LIFO) costing method