Last Purchase Price calculation

[Former Member]

Can someone point me to a definitive article on how LPP is calculated?  A client is seeing variances that we cannot explain.  They are running moving average.  LPP is the result of a GRPO, AP Invoice, Inventory Transfers and/or Landed Costs. What else affects LPP?

[kothandaraman_nagarajan · Accepted solution]

Hi,

Please check this thread

Thank you.

[Johan_H]

Hi Randy,

First off, a common misconception with clients is that LPP and moving average are the same thing. They are most definitely not.

In short, the LPP is simply the most recent purchase price.

What you described, is how Moving Average is calculated (by the way, also production impacts moving average, and moving average is a value determined per warehouse).

A simplified example:

Purchase 100 pcs for $ 1. LPP = $ 1 and MA = $ 1

Purchase 50 pcs for $ 1.20. LPP = $ 1.20 and MA = $ 1.07

You should run the Inventory Audit Report for this item, preferably with a time span from the go-live of the company database until now.

This report will show you exactly how the current stock came to be, and at the same time with what values. It will also show you which transaction (types) have an impact on the (moving average) price.

Regards,

Johan

P.S. It is prudent that you check the client's Document Settings, because it is possible that the base price origin setting is set to Last Purchase Price, when it should be set to Cost Price