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Distorted Average Cost 02: Negative quantities on hand

edited Jul 3, 2023 2:50PM in Distribution - JDE1 (MOSC) 6 commentsQuestion

I would like to gather more information about the WAC 02 cost method. Through my testing, I have observed that negative quantities on hand can have a distorting effect on the calculation of weighted average cost. The WAC method involves dividing the total cost of inventory items by the total quantity on hand. However, when negative quantities exist, they can offset or decrease the total quantity, which in turn artificially inflates the average cost per unit.

Any more info on reversing receipts and negative inventory on WAC 02 cost method will be highly appreciated

Thanking you in advance for your assistance

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