Costing Method

CostSync supports three industry-standard costing methods. Choose the one that best fits your business and accounting requirements.

Available Methods

FIFO (First In, First Out)

The oldest inventory costs are used first when calculating COGS.

Best for:

• Businesses with perishable goods
• Companies wanting to match physical inventory flow
• Situations where older inventory should be sold first

Example: If you bought 10 units at $5, then 10 units at $7, selling 5 units would use the $5 cost.

LIFO (Last In, First Out)

The newest inventory costs are used first when calculating COGS.

Best for:

• Businesses in inflationary environments
• Reducing tax liability (higher COGS = lower profit)
• Non-perishable goods

Example: If you bought 10 units at $5, then 10 units at $7, selling 5 units would use the $7 cost.

Average Cost

Uses the weighted average of all inventory costs.

Best for:

• Simplicity and ease of calculation
• Businesses with fungible inventory
• When individual unit tracking is impractical

Example: If you bought 10 units at $5 and 10 units at $7, your average cost is $6 per unit.

Changing Your Costing Method

1. Go to Settings in CostSync
2. Click Costing Method
3. Select your preferred method
4. Click Save

Considerations

• Consult with your accountant before choosing a method
• Some jurisdictions have restrictions on LIFO
• Consistency is important for accurate financial reporting