When Workbench is set to use the Period Average stock costing method, according to the Stock cost method Control Parameter, the Average Cost is calculated as below:
[Value of Stock at the start of the period] + [Value of Receipts] + [Value of Stock Value Adjustments] + [Value of Initial Stock Adjustments] + [Value of Inwards Transfers]
divided by
[Quantity of Stock at the start of the period] + [Quantity of Receipts] + [Quantity of Initial Stock Adjustments] + [Quantity of Inwards Transfers]
where:
[Value of Stock at the start of the period] - as recorded in the stock closeout for the previous period, being Average Cost * Quantity of SOH
[Value of Receipts] - the value of stock receipts (Inwards Goods) is determined by the unit cost recorded on the Purchase Order Lines being receipted, as the actual cost is unknown until the subsequent AP Invoice is processed some time later. If the PO is in foreign currency, the receipt value in local currency is calculated at the prevailing currency rate, unless the PO is flagged as Fixed Currency, in which the PO currency rate is used.
[Value of Stock Value Adjustments] - these are value adjustments only, where the quantity is zero. Adjustments which have a non-zero quantity (e.g. stocktake adjustments) are not included. Value adjustments can be used to include landed costs in stock Unit Cost Rates.
[Value of Initial Stock Adjustments] - these are stock adjustments in the first period where stock is recorded in a particular item/location. This enables the initial average cost of a new item/location to be established by means of a stock adjustment, as normally stock adjustments with non-zero quantities do not affect the average cost.
[Value of Inwards Transfers] - the value of transfers where stock has been transferred into a stock location. Note that the Unit Cost Rate used in stock transfers comes from the location the stock is being transferred out of.
[Quantity of Stock at the start of the period] - as recorded in stock closeout for the previous period.
[Quantity of Receipts] - the quantity recorded on Inwards Goods Lines for stock purchases
[Quantity of Initial Stock Adjustments] - these are quantities on stock adjustments in the first period where stock is recorded in a particular item/location. This enables the initial average cost of a new item/location to be established by means of a stock adjustment, as normally stock adjustments with non-zero quantities do not affect the average cost.
[Quantity of Inwards Transfers] - the quantity of transfers where stock has been transferred into a stock location.