# NetSuite Average Cost Calculation: Per-Location Average Cost Calculator

> Source: https://netray.co/tools/netsuite-average-cost-per-location-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Enter on-hand quantity, current average cost and a receipt with landed cost to see the new location average, COGS on the next issue and the cost change.

## Category

netsuite

## Erp

NetSuite

## Audience

- Cost accountant
- Inventory controller
- NetSuite administrator

## Tool

**Kind:** calculator

**Inputs:**

#### On hand at the location before receipt

**Key:** onhand_qty

**Type:** number

**Default:** 400

**Min:** 0

**Step:** 10

**Unit:** units

#### Current average cost

**Key:** current_avg_cost

**Type:** number

**Default:** 12.5

**Min:** 0

**Step:** 0.05

#### Receipt quantity

**Key:** receipt_qty

**Type:** number

**Default:** 600

**Min:** 0

**Step:** 10

**Unit:** units

#### Receipt unit cost (PO rate)

**Key:** receipt_unit_cost

**Type:** number

**Default:** 13.4

**Min:** 0

**Step:** 0.05

#### Landed cost per unit allocated

**Key:** landed_cost_per_unit

**Type:** number

**Default:** 0.35

**Min:** 0

**Step:** 0.05

#### Quantity issued after the receipt

**Key:** issue_qty_after

**Type:** number

**Default:** 300

**Min:** 0

**Step:** 10

**Unit:** units

**Outputs:**

#### Receipt value incl. landed cost

**Key:** receipt_value

**Expr:** receipt_qty * (receipt_unit_cost + landed_cost_per_unit)

**Format:** currency

#### New on-hand quantity

**Key:** new_qty

**Expr:** onhand_qty + receipt_qty

**Format:** integer

#### New average cost at the location

**Key:** new_avg_cost

**Expr:** (onhand_qty * current_avg_cost + receipt_value) / new_qty

**Format:** currency

**Primary:** true

#### Cost of the issue

**Key:** cogs_on_issue

**Expr:** issue_qty_after * new_avg_cost

**Format:** currency

**Primary:** true

#### Remaining inventory value

**Key:** remaining_value

**Expr:** (new_qty - issue_qty_after) * new_avg_cost

**Format:** currency

#### Average cost change

**Key:** cost_change_pct

**Expr:** (new_avg_cost - current_avg_cost) / current_avg_cost * 100

**Format:** percent

**Chart:**

#### New average cost vs receipt unit cost

**Type:** line

**X:** receipt_unit_cost

**From:** 8

**To:** 20

**Steps:** 25

**Series:**

- new_avg_cost

**Disclaimer:** Simplified moving-average model for one item at one location with positive on-hand. NetSuite recalculates costs in transaction date order, so backdated transactions, negative inventory and later landed cost changes can change results.

## Content

**Intro:** This calculator simulates how NetSuite's average costing updates an item's cost at one location when a receipt arrives, including landed cost, and what the next issue will cost. Use it to explain a cost change on an item or to predict the effect of a receipt before it posts.

**Sections:**

#### How NetSuite average costing works

**Body:** With the Average costing method, each receipt blends into the existing on-hand value: new average = (on-hand quantity x current average + receipt quantity x receipt cost) / new quantity. With Multi-Location Inventory enabled, NetSuite keeps the average per item per location, so the same item can carry different costs at two warehouses and a transfer order moves cost between them. Issues such as fulfillments, work order issues and adjustments out leave the average unchanged and are costed at the average current at their transaction date. Landed cost allocated on the item receipt is added to the receipt cost, so freight and duty flow into the average.

**Bullets:**

- receipt value = qty x (unit cost + landed cost per unit)
- COGS on issue = issued qty x new average

#### Worked example

**Body:** 400 units at 12.50 are worth 5,000. A receipt of 600 at 13.40 plus 0.35 landed cost is 600 x 13.75 = 8,250. The new quantity is 1,000 and the new average 13,250 / 1,000 = 13.25, up 6%. Shipping 300 units afterwards costs 3,975 and leaves 700 units worth 9,275. If the landed cost had been entered a week later on the same receipt, NetSuite would revalue the receipt and recost the later shipment, so the first COGS posting would change.

#### Backdating, Cost Accounting Status and negative inventory

**Body:** NetSuite costs inventory in transaction date order. Entering or editing a transaction dated before others for the same item and location queues a recalculation of every later transaction, and costs and GL impact change after the fact. The Cost Accounting Status on inventory-affecting transactions shows whether costing for that line is complete or still pending, and month-end close should wait until pending items clear. Negative on-hand, where shipping is allowed before receipt, makes issues post at the last known cost and get corrected when the receipt arrives, which is a common source of unexplained variance. Keep receipts posted before shipments where possible.

#### How to check the result in NetSuite

**Body:** Open the item record, Inventory subtab, Locations, to see average cost per location, and use the Inventory Valuation or Inventory Valuation Detail report filtered to the item and location to see each transaction's quantity, cost and running value. A saved search on transactions with the item, location, quantity and amount columns, sorted by date, rebuilds the running average for comparison with this calculator.

**Cta:** If cost accountants want to ask NetSuite why an item's average cost moved and which receipt or backdated entry caused it, in plain English on your own infrastructure, we can set that up.

**Faq:**

#### How does NetSuite calculate average cost?

**Answer:** Each receipt is blended into existing stock: the new average equals existing on-hand value plus receipt value, divided by the new on-hand quantity. Receipt value includes landed cost allocated to the receipt. Issues are costed at the current average and do not change it. With Multi-Location Inventory the average is kept per location.

#### What costing methods does NetSuite support?

**Answer:** Item costing methods are Average, FIFO, LIFO, Standard, Lot Numbered and Serialized (specific cost per lot or serial), and Group Average across locations where that feature is enabled. The method is set per item, and changing it on an item with history is restricted, so choose before go-live.

#### What does Cost Accounting Status mean in NetSuite?

**Answer:** It shows whether NetSuite has finished costing an inventory transaction line. After backdated transactions or cost changes, later transactions are queued for recalculation and their cost and GL impact may update. Check that no transactions are still pending before closing a period or reconciling inventory to the GL.

#### Why do two locations show different costs for the same item?

**Answer:** With Multi-Location Inventory and Average costing, each location keeps its own average based on the receipts, transfers and adjustments at that location. Receipts at different prices or freight allocations at one site move only that site's average. Transfers carry the shipping location's cost to the receiving location.

## Search terms

netsuite average cost calculation, average costing in netsuite, costing methods in netsuite, netsuite cost accounting status, netsuite average cost per location, netsuite landed cost average cost, netsuite inventory costing recalculation

---
Talk to an engineer: https://netray.co/contact?intent=erp_ai | Machine catalog: https://netray.co/agent/catalog.json