Margin calculation typically involves the relationship between the sell price and the cost price of a product. Margins are often calculated using the formula:
Margin (%) = [(Sell Price - Cost Price) / Sell Price] × 100
This formula determines the percentage of profit relative to the sell price, which is a critical metric for assessing profitability.
When a Purchase Order (PO) is completed, if the costs on the PO have changed since initially receipting the PO the margins on any Sales Orders dispatched since the receipt date will be updated to include the additional costs. This updating change to the Sales Order margins is called a recost.
For example, suppose a product has a sell price of $10 and an initial cost price of $8. If a supplier invoice updates the cost to $9, the margin calculation changes as follows:
Initial Margin:
[(10 - 8) / 10] × 100 = 20%
Updated Margin:
[(10 - 9) / 10] × 100 = 10%
Purchase Order Recosting details can be viewed on the following reports.
Unleashed Report | Purchase Order Recosting |
Margin, profit, and cost values will be updated for the ordered product. | |
The recosting details are displayed as Purchase Order Recost in the Transaction Type column. | |
The recosting details are displayed in the Transaction Type column after Receipt and Completion of the purchase order. | |
The Receipted and Completed purchase orders are displayed. |