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.
could please kindly let us know. when this bug could be resolved
I am facing the same issue which is confusing for me
Did any one got the answer for this
Only @lubos can resolve this with a program change.
This bug will be fixed but as it stands now, it cannot be fixed right away. It turns out how general ledger engine has been developed, it cannot support this report if inventory kits are used. That is a good thing, it made me realize of some shortcomings I need to address but it is a bit longer process as quite a few design decisions I made long time ago have to be reverted and rewritten. I’m slowly chewing through it. After all, I don’t want to see bugs in the program myself.
Is there any update on this issue?
The latest version (18.10.25) is fixing this issue by simply excluding sales of inventory kits.
It turns out, calculating profit margin on sales of inventory kits is not as simple. Let me explain.
You have 6 inventory items on hand at $30 each and make a sale of 9 inventory items for $50 each.
Since you are 3 inventory items short, Manager will calculate profit margin as if you sold only 6 items.
That is sale = $300 and cost of goods sold = $180. The reason why Manager does it this way is to make sure your cost of goods sold figures are not deflated when you sell more than you have on hand. For profit margin purposes, Manager will calculate your profit margin only on items where the cost price is known.
Why is this approach tricky when it comes to inventory kits? Well… Let’s say you have a kit called
Notebook & Pencil for $10 which consists of 1x Notebook and 1x Pencil.
You sell the kit but you have no pencils on hand. Only notebooks. Since the cost of pencil is not known, Manager wouldn’t know how much of this $10 of sale should be attributed to notebook.
There are several ideas I have to solve this issue but until then, so this bug doesn’t linger in Manager forever, inventory profit margin report will exclude sales of inventory kits for now. If you need inventory profit margin report for inventory kits, that will be new feature.
how about a separate report only stating how many inventory kits were sold with details of their composition and the buyers? A sort of sale by inventory kit without any margin.
The latest version (20.6.5) is finally fixing this issue. Inventory kits are now on the report as well.
Hey its great now. Just i checked in Inventory profit margin the sales amount of the Inventory kit is showing the full amound and profit is being subtracted from the full amount of kit instead as it should show only sales amount (minus tax amount) if we use tax inclusive sales invoice despite selecting tax same tax code as of inventory items of bill of materials in the inventory kit.
@fahadalarab you are correct. Fixed in the latest version (20.6.8)
Tried to drill down into the profit margin.