WHAT IS LAST COST?
Last cost is one of the methods to calculate the value of COGS. It uses the most recent purchase price to times with the total quantity left of inventory.
| LAST COST = total quantity left of inventory x the last purchase price |
For Example:
Melinda bought ITEM A on 1st May 2020 and 2nd May 2020. The price has varied between these two days.
1st May 2020 - RM1
2nd May 2020 - RM2
1. On 1st May, Melinda recorded RM1 into the purchase invoice.
2. On 2nd May 2020, Melinda recorded RM2 into purchase invoice.
3. Then, go to product/services and click stock report. The unit cost RM2. System will take in RM2 as the unit cost due to RM2 is the last purchase price. This is how Last Cost works.
Refer to the picture below, these are the differences between WAC and Last Cost.
Click What is Weighted Average Cost to know the details of WAC.
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