Costing FAQ: weighted average, not FIFO
Which costing method Trackost uses (moving weighted average, not FIFO or LIFO), what is inside COGS (labor yes, overhead no), and why old numbers never change.
If a number looks wrong rather than surprising, start with Costing troubleshooting.
Questions
Does Trackost use FIFO, LIFO or weighted average?
Moving weighted average, and only that. There is no FIFO or LIFO option. Every material and every product variation carries one unit cost: the average of what its stock cost you. Purchases, completed batches, vendor credits and adjustments with a cost basis re-average it. Using stock, selling it and restocking a customer return never change it. For example, 100 g bought at $0.10 a gram plus 200 g at $0.13 a gram leaves 300 g at $0.12 a gram. Trackost keeps no separate layers of older and newer stock.
What is inside a product's COGS?
The quantity sold times the variation's weighted-average cost at the moment you fulfill the order. For a product you make, that cost is built by your completed batches: the materials each batch used, at their weighted-average cost, plus labor, which is the recipe's labor minutes at your labor rate. The recipe's flat overhead is not included. The recipe shows it on its “With overhead:” line and Pricing includes it in Full cost, but no batch adds it to the value of your stock, so it never reaches COGS.
When is COGS counted?
When you fulfill the order. The date beside Fulfill & mark shipped is the ship date, and the sale's COGS and revenue are dated that day, so the ship date decides which period the sale lands in. Until you fulfill it, an order has no COGS. Its Order date places it in the order reports but never moves its COGS.
Is Trackost cash or accrual?
Trackost doesn't decide that for you. Every movement is dated by the event itself: a purchase by the date you give it, a batch's materials by the day it starts and its finished units by the day it completes (the same day for Make it now), a sale by its ship date. The reports read those dates. How you file, cash or accrual, is between you and your accountant.
Do returns change old orders?
No. A fulfilled order keeps the COGS it was given on its ship date. A return is added as new ledger entries, dated the day you record it: revenue goes back by the refund, and the returned units' cost is reversed if you restock them or written off if you don't. The order page keeps showing the original figures; the Profit dashboard and the Profit & Loss report include the return.
Are shipping and tax part of revenue or profit?
No. Revenue is the price of what you sold: each line's unit price times its quantity. The shipping and tax you enter on an order are part of its Total, but they are not revenue and not profit. Fees are spread across the order's lines in proportion to each line's revenue and come off its true profit. The Profit & Loss report leaves fees out; Orders Margin shows them.
Is this tax advice?
No. Trackost records what happened and when, and its reports, Schedule C (COGS) included, are a starting point for you and your accountant. Check any figure before it goes on a tax return.