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.