Minfos recommends switching to FIFO on the first day of the month only. Please contact Minfos support to book in this database configuration change.
FIFO calculates stock value and gross profit based on the cost at the time of invoice entry, instead of taking the last buy price directly from the Unit Cost field (Excl. GST) in the stock card and applying that as the COGS (cost of goods sold) for all stock on hand (SOH).
- On 02/01/2019, six Nurofen Child 3Mnth-5yr Strawb 100ml products were invoiced into the database at a cost of $8.72 each.
- Two of these have been sold.
- Then, on 07/01/2019, four more were invoiced into the database at a cost of $8.23 each, one bottle has then been count adjusted out of the database on 22/01/2019, with FIFO the stock is adjusted out based on the first invoiced cost of $8.72.
- On 25/07/2019, another six were invoiced into the database at a cost of $8.20 each.
- The Unsold quantity from each invoice (or positive stock adjustment) is displayed in the Product Purchases Enquiry window.
The store sells eight of this product at $12.99 retail.
- The first three will be sold based on the Unit Cost of $8.72,
- the next four will be sold based on the Unit Cost of $8.23
- and the last one will be sold based on the Unit Cost of $8.20.
Using the example above the gross profit percentage is calculated as below:
- The first three sold will have a GP% of 32.87% (12.99-8.72/12.99*100).
- The next four sold will have a GP% of 36.64% (12.99-8.23/12.99*100).
- The last one sold will have a GP% of 36.87% (12.99-8.23/12.99*100).
Stock control best practices:
After having FIFO configured, you must ensure your stock control processes are accurate.
1. Cost changes need to be completed in Order Maintenance, either via an invoice or a credit. When entering a credit, the Last Cost is used by default (check the unit cost from previous purchases to ensure the stock will be credited at the correct cost).
2.If you choose to sell a product before an invoice has been completed, ensure the unit cost in the stock card is correct.
3. If you stocktake via the Minfos Mobile App or PDA scanner, be careful using the Overwrite and Add options, as this will affect your FIFO calculations. If the stocktake adjustment is a negative adjustment, Minfos will use the cost from the earliest cost price with unsold quantities. If the SOH adjustment is a positive adjustment, Minfos will use the cost from the stock card (Last Cost).