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Published 23 June 2016

How to Calculate Inventory Value Using the Moving Average Costing Method


Moving Average is one of the Costing Method (Main Menu | Setting and Parameters | Costing Method | Moving Average) that can be selected by user in mobile cashier iREAP POS. Other costing method that can be selected to is Standard Costing Method.

Also Read:
How to Calculate Inventory Value Using the Standard Costing Method

Under the moving average inventory method, the average cost of each inventory item in stock is re-calculated after every inventory purchase. The average cost is computed by dividing the total cost of goods available for sale by the total units available for sale. This gives a weighted-average unit cost that is applied to the units in the ending inventory.

The formula of Moving Average Inventory Calculation Method:

Moving Average Rate = ( (Available Qty in stock * Average Rate) + (Incoming Stock * Incoming Rate)) / (Available Qty in Stock + Incoming Stock)

Here are the example, how to Calculate Inventory Value using the Moving Average Costing Method click this link


EXAMPLE 1. Moving Average inventory Valuation Method for Positive Stock

Item :Beras Pandan Wangi 5kg
Beginning Balace :10 Sack @ 20.000
Sales :3 Sack
Purchase :5 Sack


EXAMPLE 2. Moving Average Inventory Valuation Method for Negative Stock

Item :Beras Pandan Wangi 5kg
Beginning Balace :12 Sack @ 22.083,33
Sales 1 :12 Sack
Sales 2 :5 Sack
Purchase :2 Sack @ 22.000
Sales 3 :1 Sack

iREAP POS : iREAP stand for Integrated Retail Application, is an application designed and developed to help you managed and run store operation, consists of Point of Sale / Cashier system and inventory control system.