While evaluating report “Inventory Profit Margin” for the period Aug 01 ~ today, I have used Inventory Kits too for just one item with defined sales price @ 59/piece and made up of two inventory items of say item#1 @ 46/piece & item#2 @4/piece (each with buying price well defined in the Inventory Items), I found certain observation and escalated profit margin that do not make sense. It is observed that instead of sales against the Inventory Kit item, the sales is shown for each component items, in each case, equal to sales amount at the Inventory Kit item’s sale price. Thus, each component item is showing profit for the difference between its buying price & Sales price of Inventory Kit item which is absurd and doesn’t make sense. Whereas, the profit margin calculation should have been against inventory kit item on difference between sale price @59 and cost price @50 (Item#1 @46+Item#2 @4=50), the profit on components items should have been zero as those include in cost of Inventory Kit item
Having faced this problem, I searched through “forum” and finally found a topic raised before by @Tut as below for this issue which is exact representation of my situation.
quote="Tut, post:1, topic:9631
The Inventory Profit Margin report is overstating sales when inventory kits are sold.
For this example, I created an inventory kit with three items, selling for 55.99:
I then sold one kit. The Inventory Quantity Movement and Inventory Value Movement reports look fine, showing proper adjustments of the components’ quantities and values. But the Inventory Profit Margin report has a problem:
The report above is for a time range that includes one sale of the inventory kit and no other inventory items. The Sales figure for each component of the kit lists the full sales price of the entire kit. In this case, total sales should have been 55.99. Total cost of sales is correct. Total Profit should have been 33.77 and total Margin 60.31%.
Yet a P&L for the same time period is correct. It seems the Inventory Profit Margin report needs a method for apportioning sales among components of inventory kits. As things stand, the report distorts profitability for any period that includes kit sales by overstating the sales figures.
The most obvious solution is to apportion sales to components based on their costs. But other options might exist. Or the margin report might report margin for the kit rather than include kit sales in component margins.
@lubos I wonder if there has been a suggestion for a work around this problem or any other solution. Or, do we need to stop using the Inventory Kit feature.
I look forward to an update/solution to above problem to in order to modify/suspend our next step for this feature.