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How Do I Know Which Dates To Use In COGS Periods When New Stock Arrives? ​

Overview ​

When new inventory arrives, determining when to start a new Cost of Goods Sold (COGS) period requires understanding when your existing stock will be depleted. SellerLegend provides two practical methods to identify this transition point.

Option 1: Days of Inventory Metric ​

Steps:

  1. Navigate to Product and Inventory > Products
  2. Locate your product and review the "Days of Inventory" column
  3. Calculate the depletion date by adding that number of days to today's date
  4. Use the resulting date as your new Cost Period's start date

Example:

  • Current inventory: 20 days remaining
  • Today's date: April 1st
  • Projected depletion: April 21st
  • New Cost Period start date: April 21st

Key Benefit: You can create future-dated Cost Periods in advance; the system automatically switches to the new COGS when the date arrives.

Option 2: Weighted Average Cost ​

This method smooths the transition when the cutoff between shipments is unclear or gradual.

Calculation Process:

  1. Identify remaining units from old shipment and their COGS
  2. Record new shipment units and their COGS
  3. Multiply each quantity by its respective cost
  4. Sum both amounts and divide by total units

Worked Example:

  • Old stock: 20 units @ $5/unit = $100
  • New stock: 100 units @ $4/unit = $400
  • Combined total: 120 units = $500
  • Weighted Average COGS = $500 / 120 = $4.17 per unit

Implementation: Create a new Cost Period on the arrival date and add an "Averaging Adjustment" Cost Element to bridge the difference between your standard breakdown and the weighted average.

Summary ​

Choose the Days of Inventory approach for distinct batch transitions, or use Weighted Average when stock blending occurs across shipments.