How does CloudWMS handle Cost of Goods?

Description

This document explains how CloudWMS handles the Cost of Goods.

Detail Steps

Sales

The accounting system allows you to report a gross profit on inventoried items only (Items marked as I stock). The accounting system stores the item's average cost when recording the sale as an invoice.

WMS allows you to report on all items. However, WMS stores the actual cost entered into the extended line on the sale line.

If this is not entered or price = 0, then it will use average cost when available.
If the average cost equals zero, WMS will store the Last Cost.
If the Last cost equals Zero, WMS will store the STD Cost.

Workflow Restrictions

Costs are recorded at the sale entry and updated when the transaction is sent into the accounting system.

The different reporting strategies will produce different results.

For accounting purposes, the accounting system figure must be used.
However, you may like to use WMS to evaluate your general sales profit. This is especially useful for companies using non-inventory items in the accounting system and marking them as inventoried in WMS.

Importing sales into the Accounting system

When importing sales into the accounting system, it uses its stored total value divided by stock on hand to determine the cost of goods value posted against the sale.

WMS does not send the cost of goods to the accounting system with a sale. Instead, the accounting system determines the cost of Goods according to the stored average value of the item.

Non Inventory Items

The accounting system allows you to report a gross profit on inventoried items only (Items marked as I stock). The accounting system stores the item's average cost when you record the sale as an invoice.

WMS allows you to report on all items. WMS stores both last cost and STD cost, and as standard for reporting, it will use STD Cost.

Workflow Restrictions

Costs are recorded at the sale entry and updated when the transaction is sent into the accounting system.

Adjustments

Adjustments are sent into the accounting system as purchases. Adjustments can be sent as either average, last, or std cost.

Methods, Last cost and Std cost can alter the cost of goods used in future sales.

Workflow Options

If WMS is used correctly, the cost of goods remains the same as if all transactions were entered directly into an Accounting system.
It is recommended that all costs of goods are reviewed on a routine basis (a minimum of once a year).

Related Information

None

KIT cost and margin for reporting

Jobs - Progressive Billing Workflow

Last Cost Price

Inventory Detail Value OnHand

Freight, Duties, Taxes and Accurate Cost of Goods