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Dixie11
April 5, 2025
Question

FIFO costing and Multiple Inventory Sites

  • April 5, 2025
  • 2 replies
  • 0 views

Does anyone have experience with FIFO inventory costing and multiple inventory sites?  I just discovered that it looks like no matter what site your inventory is located (Arizona or Florida), QB Desktop is taking the FIFO costing from the oldest material no matter the location.  We received material in Florida on 1 receipt, then sold all the said material to 1 customer on 1 invoice expecting a certain profit from that sale.  When I dug deeper into why the profit was so much lower that expected, I discovered that QB was taking FIFO costs from other inventory sites where material was older.  FIFO shouldn't be doing that, especially when there are multiple States involved.  I also found material in Arizona was used for FIFO costs in a sale that originated in Texas where are material actually is located.  FIFO should first point to an inventory site, then use the FIFO for that inventory site.  We have always been on FIFO, we never had average costing so I am confused by this.

2 replies

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LouiseG12
April 5, 2025

When you enable the First In, First Out (FIFO) method in your QuickBooks Desktop (QBDT), Dixie, the software is designed to consistently select the oldest item from your inventory for processing, no matter where it is located across various storage sites. If you have feedback or suggestions based on your experience with this approach, I can guide you through the process of sharing these with our product engineers.

 

It's important to us that we hear from users like you. Submitting your insights directly to our Product Development team allows us to make enhancements to our systems, ensuring they meet your needs and improve your experience. Your contributions are crucial in helping us refine and advance our software continuously.

 

Here's how:

 

1. Navigate to the Help option, then Send Feedback Online.

2. Select the Product Suggestion option. A pop-up window displays.

3. Enter your feedback suggestion.

4.Click the Send Feedback.

Furthermore, to learn more about the cost of goods sold tracking, you can read this article for detailed information: Understand inventory assets and cost of goods sold tracking.

 

If there’s anything you need guidance on, or if you have any further questions about managing your inventories, please don’t hesitate to reach out at any time. Our dedicated support team is here to provide you with tailored assistance and all the information you need to ensure your inventory management process runs seamlessly.

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Dixie11Author
April 7, 2025

If that is the case, there is no reason to have separate inventory sites.  Costs and sell prices are not the same in different areas/regions, so it makes no sense to me that the COGS and FIFO would not following the inventory sites.  Taking a cost (FIFO or Average) from one site for a sale for a different site does not report correct profit.

Is there another way in QB Enterprise to be able to make this happen?  I don't believe other business wouldn't have this same issue.

Rainflurry
Rainflurry
April 7, 2025

@Dixie11 

 

"QB Desktop is taking the FIFO costing from the oldest material no matter the location."

 

Yes, that's the proper way to cost inventory from both a tax perspective and GAAP.  A single-entity company that has multiple warehouses needs to combine inventory for valuation purposes, regardless if you're using FIFO or average cost. 

 

"I discovered that QB was taking FIFO costs from other inventory sites where material was older. FIFO shouldn't be doing that, especially when there are multiple States involved."

 

If you were able to manipulate the cost of product you ship based on location, then you could manipulate your income from a tax perspective and the IRS frowns on that.  Want to show lower income for tax purposes?  Ship the higher cost product.  Want to report higher income for investor or credit purposes?  Ship the lower cost product.  If you want to track profit based on location, you would need to do that outside of QB as QB cannot track that because it wouldn't be true FIFO or average cost if it did. 

 

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Dixie11Author
April 7, 2025

We actually do select what inventory to sell by selecting the location the material is stored.  The FIFO costs should be used within a particular location since that is where it will be shipped from.  COGS and pricing are different in multiple States and using a FIFO cost from California or Florida if we are shipping it from the Texas warehouse makes no sense.  I have worked for multiple large companies that have multiple locations that have always used FIFO and they don't take the costing from one warehouse and ship from another. 

Rainflurry
Rainflurry
April 8, 2025

@Dixie11 

 

"The FIFO costs should be used within a particular location since that is where it will be shipped from. COGS and pricing are different in multiple States and using a FIFO cost from California or Florida if we are shipping it from the Texas warehouse makes no sense."

 

I agree that it makes no sense if you're trying to calculate profitability by location, but it does make sense from a tax/GAAP perspective.  The FIFO costing on the company tax return should be calculated company-wide, not by location, and summed.  QB can't calculate FIFO costing by location because, believe it or not, that's relatively advanced functionality and QB is not an ERP-level system.  Its capability and cost are significantly less.     

 

"I have worked for multiple large companies that have multiple locations that have always used FIFO and they don't take the costing from one warehouse and ship from another."

 

Were these companies using an ERP-level software platform? 

 

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