Inventory Costing Methods

NetSuite supports multiple inventory costing methods. Choose based on your industry and reporting requirements.

Average Cost

Weighted average of all units

Most Common

FIFO

First in, first out

Rising Costs

LIFO

Last in, first out

US Tax

Standard

Predetermined cost

Manufacturing
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This appendix is under development. Full content will include detailed calculations and comparisons.

Average Cost Method

Calculate weighted average: (Beginning Value + Purchases) / (Beginning Qty + Purchased Qty). Updates with each receipt.

FIFO Method

Oldest inventory sold first. In rising price environments, results in lower COGS and higher taxable income.

LIFO Method

Newest inventory sold first. Results in higher COGS during inflation. Not permitted under IFRS.

Method Comparison

Side-by-side example showing how each method produces different COGS and ending inventory values.