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Outsourced purchase order (OPO) product costs

Track OPO product costs in Katana, including purchase price and ingredient costs.

Dayvid Lorbiecke avatar
Written by Dayvid Lorbiecke
Updated yesterday

Understand how Katana tracks product costs for outsourced manufacturing, including purchase price, landed costs, and ingredient usage. This helps you maintain accurate financial records and improve pricing decisions.


What contributes to product cost in OPOs?

When you outsource manufacturing via an outsourced purchase prder (OPO), Katana calculates the product cost as:

Product Cost per Unit = Landed Cost per Unit + Ingredient Cost per Unit

Components explained:

  • Purchase price: The per-unit price charged by your contractor for making the product. Can be in a foreign currency.

  • Landed cost: Includes the purchase price plus any distributed additional costs (like shipping, handling). Distribution is done by value across line items.

  • Ingredient cost: Based on the average cost of ingredients in the stock location tied to the OPO.


Purchase price and landed cost

  • Purchase price: Set per product variant and shown on the item card. This represents the direct cost paid to the contract manufacturer.

  • Landed cost per Unit:

    • Includes both purchase price and additional costs.

    • Calculated using Katana’s "by value" method, which distributes additional costs proportionally based on item value.

    • May use a different currency from your base currency.


Ingredient costs in an OPO

When a product is added to an OPO, Katana automatically pulls in its default ingredients from the product recipe (BOM).

The Track ingredients tab of an outsourced purchase order

How ingredient cost is calculated:

Ingredient Cost = Average Cost (from tracking location) × Quantity Used
  1. Ingredient costs are always calculated in base currency.

  2. If stock = 0, the average cost becomes 0.

    • In this case, Katana initially displays the default purchase price for reference.

    • Note: Completing the OPO with zero ingredient stock is not recommended, as it will use 0 for that ingredient’s cost in calculations.


Editing ingredients on an OPO

You can:

  • Add new ingredients

  • Remove unnecessary components

  • Change quantities or items used in production

This is useful if your contractor uses alternate components not in the default recipe.


Viewing product cost per unit

The track ingredients tab of an outsourced purchase order - highlighting the product cost per unit

Katana calculates the full product cost per unit directly in the Track ingredients tab on the OPO card.

Formula:

Product Cost per Unit = (Purchase Price OR Landed Cost per Unit) + Ingredient Cost per Unit

This value is in your base currency and updates automatically based on real-time stock and pricing data.


Analyzing profitability

Once a sales order (SO) is completed, Katana shows a breakdown of:

  • Sales revenue

  • Cost of Goods Sold (COGS) based on average costs

  • Profit per SO

Go to the Done SOs table to review past performance. Read more


Summary

Component

Details

Purchase price

Price per unit from contractor (can be in foreign currency)

Landed cost

Purchase price + additional costs

Ingredient cost

Based on average cost at stock location

Editable?

Ingredients and recipe steps can be edited per OPO

Currency

Ingredient cost = base currency; purchase price can vary


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