Costing Methods

Costing Methods affect how the total value of your inventory in your accounting records is calculated over the course of time. DEAR uses actual accounting costing methods. The costing method applied to a product affects the order in which stocks are picked


DEAR allows the following costing methods:

  1. FIFO

  2. FIFO - Serial Number

  3. FIFO - Batch

  4. FEFO - Serial Number

  5. FEFO - Batch

  6. Special - Batch

  7. Special - Serial Number.


Table of Contents


Costing Method is set and changed from the product detail screen (Inventory -> Products -> [selected product]).


NOTE: DEAR does not currently support checking/enforcing uniqueness of serial numbers, and it is possible to enter duplicate serial numbers into the system. Please be aware of this when carrying out inventory operations. This is an active feature request on our forum. You can make and vote for feature requests on our forum; requests are reviewed based on popularity and importance for inclusion in future development releases.


FIFO Methods

  • FIFO

  • FIFO - Serial Number

  • FIFO - Batch


Use the 'First-In First-Out' Inventory Costing Method to determine the value of goods sold where in the first batch of purchased inventory there will be the first ones to be sold. The first goods that were purchased are going to be the first cost that will be associated with the sale. This method normally assumes that the oldest goods are sold first, but the physical movement of goods does not necessarily have to follow this order. 


Variations FIFO - Serial Number and FIFO - Batch make the Serial number/Batch field mandatory. The serial/batch number must be specified in the Pick stage of the sales process as well as the Stock Received of the purchase process. 


Learn more about FIFO Costing Method.


FEFO Methods

  • FEFO - Serial Number

  • FEFO - Batch


Use the 'First-Expired First-Out' Inventory Costing Method when material requirements are serviced in the order of items with the earlier date of consumption regardless of the date of entry or acquisition.


FEFO is mainly used in the food industry and where it is required to monitor the expiration date or period of durability. If a batch or serial number is not specified, DEAR will automatically generate batch numbers for the product. The serial/batch number must be specified in the Pick stage of the sales process as well as the Stock Received of the purchase process. An expiry date must be specified for products with this costing method. 


Learn more about FEFO Costing Method


Special Methods

  • Special - Batch

  • Special - Serial Number


Special methods require a batch or serial number to identify products and are not affected by when the items were added to your inventory. If a batch or serial number is not specified, DEAR will automatically generate batch numbers for the product. The serial/batch number must be specified in the Pick stage of the sales process as well as the Stock Received of the purchase process. A product can be selected via serial/batch number regardless of when it was purchased. 


Batches and Serial Numbers


Batches: The DEAR Inventory system is capable of tracking goods sold, using an assigned Batch number, once the sold items are invoiced. This will allow the user to trace goods in case a recall occurs or the customer requires any information about the product/batch sold to them. 


Serial Numbers: Adding serial numbers to your product is extremely helpful to your business because:

  • Each product will have its own unique identifier and can be easily verified whenever there is a product return. You can also make sure that the product returned is from your store.
  • It makes handling of warranty and claims simple.
  • Your business’ product reporting will be accurate up to the Serial number level.
  • Search within your Inventory or past Sale and Purchase Orders will be easier and save you time looking for a specific product.


Changing the Costing Method


The costing method cannot be changed if you have non-zero stock on hand. If you never or rarely have zero stock on hand for a product, you will have to use a stock adjustment to make it possible to change the costing method. 


Change the Costing Method:

  1. Zero out existing stocks by creating a stock adjustment so that stocks received under the current costing method will be removed.
  2. Open the product details screen and change the costing method, then save.
  3. Re-enter the previously zeroed out stocks via stock adjustment (add a batch/serial number on the relevant field if the change is from a non-batch to a batch enabled/serial number enabled costing method).


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