What is the default costing method in NetSuite?

The default costing method in NetSuite is the Average Costing or Weighted-Average Method. This method calculates the cost of inventory by averaging the costs of all the items in stock. As new inventory is acquired, the system updates the average cost, providing a more stable valuation over time, which can be beneficial for financial reporting and inventory management.

Using average costing helps businesses manage fluctuations in material costs without drastic changes in reported inventory values. It simplifies the accounting process by eliminating the need to closely track the costs of individual items, making it a practical choice for many companies.

In contrast, other costing methods such as FIFO or LIFO would require more meticulous tracking of specific inventory batches or layers, which can complicate the accounting efforts. Standard costing, while useful for certain manufacturing environments where costs are predetermined, is not typically set as the default method.