Average vs. Last vs. Standard Cost Prices
Within a product on Merchanter there are three main cost prices that are recorded and can be used for different purposes.
Average Cost Price (ACP)
This is a weighted average of the cost of the stock that has been brought into the depot. This is often the most accurate position of the cost of the product, relative to the stock that has been brought in or made. It is maintained automatically by purchasing, adjusting and milling in stock.
When viewing a product record under the costs tab (see screenshot) in additional to the product average cost prices you can also see listed the average cost prices at all depots (quays) in the left hand column.
Last Cost Price (LCP)
As the name would suggest this is the last price that this product was ordered at. In the settings of the system you can select whether the Average and Last cost prices are updated at the point of receipt or completion of a purchase.
Standard Cost Price (SCP)
This is a management cost price that you have control over how it can best work for each product. The Standard Cost Price can be either manually maintained, so set by a senior user, or be an automatic calculation, based on another figure. Below are the different calculation types:
- Average Cost Price Adjustment - setting a percentage difference from the ACP
- Last Cost Price Adjustment - setting a percentage difference from the LCP
- Base Price Adjustment - setting a percentage markdown from the base selling price
- Best Supplier Price Adjustment - setting a percentage difference from the lowest live supplier price
- Highest Cost Price Adjustment - setting a percentage difference from the highest cost out of the ACP, LCP and any live supplier prices
The Stock valuation for each depot (and location) is calculated by the ACP, LCP and SCP, though the ACP valuation is often the one to use in the financials
When making sales the operator can be shown the cost and margin against any of the ACP, LCP or SCP, but the margin figures for the company will always be against the ACP cost.