How are cost prices used in Sumtracker
Cost prices are used in reports for cost of goods sold and stock valuation. When you export product list or stock by location, the cost per unit and total cost value is exported for each product.
Cost Prices can be updated through the following ways:
manually updated in products
automatic update through Purchase Orders
The cost prices of products in Sumtracker do not include any taxes. They represent the basic amount of purchase for each product.
Update cost price of products individually
Click on Product SKU in Product List
Add cost and save the product
Update cost price of products in bulk
Export the Product List
Add Cost corresponding the Product
Import the List
How are cost prices updated through Purchase Orders
Cost per item for each product can be updated right from the Purchase Orders.
We use the weighted average pricing model based on your existing inventory only.
When you receive items in a Purchase order, the cost of the product is updated as per the following calculation.
We calculate the per unit landed cost of the product in the PO.
The currency conversion rate is 1 if the PO is made in default currency. If you are using any other currency, then you must update the correct conversion rate in PO.
After calculating the landed cost, we calculate the new cost price as follows
We do not update the cost of product if you have filled 0 in the purchase price of the product in PO
Sample cost calculations
Here's how the calculation for cost is done with simple examples:
Case 1 | existing inventory = 10 units existing cost = 10 USD/unit. Now you received 10 units @ 6 USD/unit. So the calculation which will happen is New cost = (10 x 10 + 10 x 6)/(10 + 10) = 8 USD/unit |
Case 2 | Lets say you sell some pieces and now you have 5 units left. You receive 10 units at 5 USD/unit. New cost = (5 x 8 + 10 x 5)/(5 + 10) = 6 USD/unit |
Case 3 | Lets say you sell all pieces. Now you buy 10 units at 4 USD/unit. New cost = (0 x 6 + 10 x 4)/(0 + 10) = 4 USD/unit |
Case 4 | Let’s say that you haven’t updated the cost for a product yet. existing inventory = 10 units existing cost = 0 USD/unit. Now you received 100 units @ 6 USD/unit The new cost will be 6 USD/unit |