Average Cost Processing
As explained earlier in the
Introduction to the NCAS Inventory Module section, the NCAS uses the moving
weighted average cost method to value inventory. The NCAS updates the average
unit cost of an item as external replenishment, internal replenishment,
transfer, issuance and reconciliation transactions are processed in the
system. The updated average cost is also the cost at which items are issued
from a warehouse. The Average Cost Processing subsection will explain how
the system calculates average cost using examples of inventory transactions
such as receipts and issues. The accounting implications of these transactions
will be discussed in the remaining subsections of the Accounting for Inventory
Transactions section.