Odoo 13 Average Cost Inventory Valuation

It is necessary to obtain a particular inventory valuation on the basis that it is the recorded stock or inventory calculation that affects the price of the goods sold, the net profit and the gross profit on the income statement. Inventory valuation can be enabled in Odoo 13. In this blog we are going to discuss in detail about the Odoo 13 Average Cost Inventory Valuation. Odoo provides three methods for inventory valuation. That is :

1.  Standard price.
2. Average Cost (AVCO)
3. First in First Out (FIFO)

Configuration

You can also change all these settings in the product categories in the inventory module.

Lets create a product category from :

Configuration -->Product --> Product Categories--> Create

Note the costing method as AVCO. Now try to create a product with Product category as Average. Set the sales price and cost price.

Go to Inventory -->Master data--> product -->Create

Now we need to see how this change of costing actually works. Create a Purchase Order for this product 1. Here, I have created 2 purchase orders to illustrate this problem. One with unit price as 10 Rs and other with unit price as 12 Rs.

Go to Purchase --> RFQ --> create

Now we have a total of 20 units of demo product in hand.

Lets check the inventory valuation of these purchases.

You may tend to confuse as this is same as with the standard price costing. But this is the computation that actually happens.

In average costing, the cost is calculated as the average of the total product price with the total units of products purchased .

That is :

Purchase 1 : 10 rs * 10 units = 100 rs

Purchase 2 : 12 rs * 10 units = 120 rs

_________________________________

Total : = 220 rs

Total units : 20 units

Average cost = 220 rs / 20 units = 11

There fore, Total cost of the product =11 rs * 20 units = 220 rs

This is how its done !

We hope, the blog help in understanding about Odoo 13 Average Cost Inventory Valuation.