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What is Moving Average Cost (MAC) in the Stock Value Report?

Cost (Moving Average Cost)

Definition: Determine the unit cost of a product using the Moving Average Cost (MAC) method. A moving average (unit) cost is an inventory costing method wherein after each goods acquisition, the average unit cost of the item is recomputed. This helps properly count the product quantity and compute the new selling price.

  1. If Purchase Management module is not installed 
  • MAC = Unit
  • Cost defined by Magento’s “Cost” attribute in Catalog product.
  1. If Purchase Management module is installed
  • MAC indexes will be re-calculated every time new items are received and transferred to warehouse(s) from PO.
  • MAC = [Total Stock Value after Purchase] / [Total Qty. On-Hand after Purchase] = ([Total Stock Value before Purchase] + [Total Cost of Items Received from PO]) / [Total Qty On-Hand after Purchase]
  • In which: Total Stock Value before Purchase = [Current Qty. On-hand in All Warehouses] * [Current MAC]

Alternative Use Case 1

Pre-conditions

  • No previous POs that have Qty Received & transferred > 0 (Items are received from Purchase Order for the 1st time)
  • Cost attribute in Catalog Product has a specified value 

Formula

  • Total Stock Value before PO = [Current Qty On-hand in All Warehouses] * [Cost (product attribute in Catalog)]

Alternative Use Case 2

Pre-conditions

  • No previous POs that have Qty Received & transferred > 0 (Items are received from Purchase Order for the 1st time) 
  • Cost attribute in Catalog Product has NO specified value (blank)

Formula

  • Total Stock Value before PO = [Current Qty On-hand in All Warehouses] * [Landed Cost (from PO just received & transferred items)]
  • Total Cost of Items Received from PO = [Landed Cost] * [Qty. Received & Transferred]
  • Landed Cost = [Purchase Cost] + [Tax] – [Discount] + [Shipping Cost] 

Note

  • Landed Cost in PO whether includes Shipping Cost, tax & discount or not depending on Inventory Costing Methods Settings
  • Total Qty On-Hand after Purchase = Current Qty On-hand in All Warehouses + Qty. Received & Transferred from Purchase Order
  • Items that will not be accounted in MAC include:items purchased but not received items received but not transferred items returned to supplier

Stock Value

Definition: Determine the total inventory cost of a product in:

  • The whole system (if Filter by Warehouse is not active)
  • A specific Warehouse (if Filter by Warehouse is active)

Formula

  • Stock Value = Qty On-hand * Cost (MAC)

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