ANS-0502 · INVENTORY & ITEM MANAGEMENT
How Does NetSuite Calculate COGS for Lot-Numbered Items?
NetSuite calculates COGS for lot-numbered items based on the selected costing method, either averaging costs or tracking specific lot values.
Short answer
NetSuite's COGS for lot-numbered items depends on the costing method. With 'Average' costing, the system calculates an average cost across lot components. If the 'Lot Numbered' costing method is chosen, inventory value and COGS are based on the specific purchase price of each individual lot number.
Scenario
Clients often inquire about the specific methodology NetSuite employs for calculating the Cost of Goods Sold (COGS) for inventory items that are tracked by lot numbers. The primary concern is whether the system averages costs across different lot components or tracks costs on a per-lot basis.
Solution
NetSuite's calculation of the Cost of Goods Sold (COGS) for lot-numbered items depends on the inventory costing method applied to the item.When the Average costing method is configured for a lot-numbered item, NetSuite calculates the average cost across the different components of the lot. This means that the system averages the costs of all units within the lot to determine the COGS.However, if the Lot Numbered costing method is selected for the item, inventory value is maintained and valued according to the purchase price specific to each individual lot number. In this case, the COGS will directly reflect the actual cost associated with the specific lot being sold.
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