FIFO Costing Method in Zangerine

FIFO Costing Method in Zangerine

Zangerine works on a FIFO costing method (First In First Out).

Not familiar with how a FIFO costing method works?


Zangerine’s FIFO costing method will help ensure you have the most accurate data possible when understanding and viewing your Costs throughout Zangerine’s reports.


It’s important we clarify the distinction between Cost and Price to start:

  • Cost is the dollar amount, or rate, in which you purchase inventory.
  • Price is the dollar amount or rate at which you sell inventory.


Traditionally inventory ordered on a Purchase Order will come into the warehouse and be received into Zangerine with the Cost from the Purchase Order.


Remember that in Zangerine,If you create a new Purchase Order and the Cost changes, the new inventory received will reflect the new Cost, while the original products received previously, will retain the costs associated with the Purchase Order they were received from.


For instance, If we ordered 100 items at $10.00 a piece, the Cost for those 100 Items will be  taken from the Purchase Order and updated to be $10.00 each.


Until the 100 items in inventory have been reduced to zero, the Cost will remain at $10.00. This is true, even if you change the “Cost” field in the product’s edit screen.


If the inventory is manually added to Zangerine, the cost will be equal to the default cost shown of the product when manually adding that inventory. The default cost on the product is set to the cost from the most recent Purchase Order, provided there was one. You can update or change this cost to reflect the cost you want it to represent before adding the inventory.


You can update the default Cost of a product by doing the following:

  1. Click Catalog.
  2. Click Products.
  3. Select a Product.
  1. You will be redirected to the Edit Product page.
  1. Click the Purchasing Tab.
  2. Enter a Cost. See image below:




Warning: If you manually add inventory and you leave cost at 0.00 it will remain that way despite adding more quantity. You must reduce your quantity to 0, add the cost, then add the quantity back in to fix the issue. Please ensure you have added your cost BEFORE inventory quantity.





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