Last Purchase Cost Valuation in TallyPrime: 2 Steps + Example

Last Purchase Cost Valuation in TallyPrime is an inventory valuation method where the cost of an item is based on the price of the most recent purchase.

This method is useful for businesses that want to price their inventory based on the latest market rates.

1. How Last Purchase Cost Works in TallyPrime:

• Initial Purchase: 100 units at ₹50 per unit.
• Second Purchase: 200 units at ₹60 per unit.

When you sell items after the second purchase, TallyPrime will value the inventory at ₹60 per unit, the cost of the last purchase.

2. Example of Last Purchase Cost in TallyPrime:

• Purchase 1: 100 units @ ₹50/unit.
• Purchase 2: 200 units @ ₹60/unit.
• Sale: 150 units.

With Last Purchase Cost, the sale would be valued at ₹60/unit, regardless of previous costs.

3. Benefits of Last Purchase Cost Valuation:

1. Reflects Current Market Prices:

Useful in pricing strategies aligned with the latest purchase cost.

2. Simple Valuation:

Easier to manage when purchase prices are frequently updated.

4. Application of Last Purchase Cost Valuation:

Ideal for businesses where the latest purchase price is more relevant for financial analysis and decision-making, such as in industries with frequent price changes.

5. Conclusion:

The Last Purchase Cost method in TallyPrime provides a straightforward and relevant way to value inventory, especially in dynamic pricing environments, ensuring that the most recent purchase price is reflected in inventory valuation.