Product costing operations are one of the most difficult duties for a business. Using product costing methodologies, it is simple to assign a definite price to a manufactured product.
Video Chapters
00:00 – Introduction
01:21 – How to set the costing method as the standard price.
05:16 – How to set the costing method as Average costing.
10:19 – How to set the costing method as FIFO.
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Inventory valuation can be used by a corporation to determine the value of products in a warehouse. Users can use an Odoo ERP to deal with product price descriptions and immediately value their goods using the costing method feature of the Odoo 16 Inventory module.
Odoo 16 has classified the Costing method into three types: Standard Price, First In First Out (FIFO), and Average cost (AVCO).
Standard Price Costing
The standard pricing is simple to understand. Standard pricing is unaffected by the purchase order price. That is, it only uses the cost field (purchase receipts and delivery have no effect on cost).
In the case of standard price product costing, the cost price is frequently updated manually. In most cases, the product’s price changes once a year or after a certain term.
Average Costing Method
The average costing approach calculates the cost of inventory items based on the average cost of all available similar goods in inventory. This is the cost of an item in inventory divided by the number of items in stock.
Every time the product is purchased and received, the cost is updated depending on the purchase order paid and the quantity ordered. However, the cost is unaffected once the goods leave the warehouse.
First In First Out (FIFO)
This technique adjusts a product’s price based on the last existing product in the inventory. As a result, removal tactics such as FIFO have an impact on price.
To perform this operation, let us create a product with a costing method set as FIFO and Removal strategy also set as FIFO
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