Buy Conversions

InventoryGuide > Inventory > Managing Stock Quantities > Converting Quantities When Buying or Selling > Buy Conversions

Buy Conversions

To calculate a Buy Conversion, divide the unit by which you purchase the selected inventory item in Accounts Payable or Purchase Order by the unit by which you store the item in Inventory. This is the number to enter in the Buy Conv box on the Qty / Price Info tab of the IN Stock window.

Buy Conversion = AP Unit / IN Unit or PO Unit / IN Unit

Example: Buy Conversions
In Purchase Order or Accounts Payable, you purchase 1 pallet of soda cans for $100. In Inventory, you store the product by the case. Each pallet consists of 100 cases. The Buy Conversion factor, therefore, is .01 (1 pallet divided by 100 cases). The Buy Conversion and Sell Conversion factors are then used to calculate cost according to the following formulas: IN Cost Per Unit = AP/PO Cost Per Unit (x) Buy Conversion factor AP/PO Cost Per Unit = IN Cost Per Unit / Buy Conversion factor The Inventory cost per unit, therefore, is $1.00 per case ($100.00 per pallet multiplied by .01). This cost is stored as the Last Cost in the IN Stock window. The Purchase Order or Accounts Payable cost per unit is $100.00 per pallet ($1.00 per case divided by .01). This cost is used as the Unit Cost when entering bills.

Example: Buy Conversions

In Purchase Order or Accounts Payable, you purchase 1 pallet of soda cans for $100. In Inventory, you store the product by the case. Each pallet consists of 100 cases. The Buy Conversion factor, therefore, is .01 (1 pallet divided by 100 cases).

The Buy Conversion and Sell Conversion factors are then used to calculate cost according to the following formulas:

IN Cost Per Unit = AP/PO Cost Per Unit (x) Buy Conversion factor
AP/PO Cost Per Unit = IN Cost Per Unit / Buy Conversion factor

The Inventory cost per unit, therefore, is $1.00 per case ($100.00 per pallet multiplied by .01). This cost is stored as the Last Cost in the IN Stock window.

The Purchase Order or Accounts Payable cost per unit is $100.00 per pallet ($1.00 per case divided by .01). This cost is used as the Unit Cost when entering bills.

You cannot use Buy Conversions for serialized stock items.

Published date: 12/21/2020