Costing Methodologies
Contents
Costing Methodologies
This page discusses various costing methodologies applicable to accounting schemas in Adempiere
Standard Costing
FIFO
LIFO
Last In First Out is prohibited from use under IAS2.IN13
It is recognised in IAS2.BC20 that in some jurisdictions, use of the LIFO method for tax purposes is allowed only if that method is also used for accounting purposes.However, the IASB concluded that tax considerations do not provide an adequate conceptual basis for selecting an appropriate accounting treatment and that it is not acceptable to allow an inferior accounting treatment purely because of tax regulations and advantages in particular jurisdictions. This may be an issue for local taxation authorities.
Last Invoice
Average Invoice
Last PO
Average PO
Retail Method
(NOT IMPLEMENTED IN ADEMPIERE)
The retail method is a costing methodology often employed in the retail industry to measure large numbers of rapidly changing items with similar margins for which it is impractical to use other costing methods.
The cost of the inventory is determined by reducing the sales value of the inventory by the appropriate gross margin percentage. The percentage must include inventory that has been marked down below its original selling price. An average percentage per department is often used.
