Consideration of cost price fluctuations in merchandise accounting

The purchase prices of the products ordered by the supplier can change over time. There are various options available to account for such cost price fluctuations.

Here, two methods for accounting for cost price fluctuations are presented:

• A practically simple solution is for the IT system to calculate the new average purchase price after each delivery and record sales at this average value as cost of goods sold.
• Another method records sales in the same order as purchases. The goods delivered first are also sold first, which is why this is referred to as the FIFO method (first in – first out).