Yes it can! Ordoro has the ability to calculate the Weighted Average Unit Cost based on your received POs in Ordoro.
How to enable this feature in Ordoro
- Select your business name in the upper right corner and select Account Settings.
- Under General, select the checkbox Recalculate Weighted Average Unit Cost upon goods receipt.
- Click Save.
How does Ordoro automatically calculate Weighted Average Unit Cost?
By definition, Weighted Average Unit Cost is calculated by dividing the cost of goods currently available for sale by the number of units available for sale.
When this feature is turned on for your account, Ordoro takes the Total Physical on Hand quantity for each product and multiplies that by the Weighted Avg Unit Cost stored in Ordoro, and then Ordoro divides that total by the Physical on Hand quantity.
Your Weighted Average Unit Cost will only update in Ordoro when you receive Purchase Orders for your products. Click here for more details on how to create a Purchase Order in Ordoro.
When you receive a product on a Purchase Order, Ordoro will recalculate the Weighted Average Unit Cost for that product using the below calculation:
Let’s see the calculation in action with SKU dvd-krull. Before receiving a PO, this product has a Weighted Average Unit Cost of $5 and 10 Total Physical on Hand.
We create a PO for this product for 10 items at $10 for the Supplier Unit Cost coming from the supplier.
When you receive the product, you will see the calculation outlined below take action. Each time you receive a product on a PO, this calculation will be made for your products.
Click on the gif below to watch the calculation in Ordoro in action.
You will see the product’s Weighted Average Unit Cost as $7.50.
NOTE:
- Weighted Average Unit Cost is ONLY calculated when the product is received on a PO.
- If your inventory hits 0 or less in Ordoro, when you receive for that product in Ordoro, the Weighted Average Unit Cost will be calculated solely from the Supplier Unit Cost for that Purchase Order.
- Ordoro saves the Weighted Average Unit Cost to 10 decimal places, but although this will not be shown within the application.