You can accurately track fully outsourced manufacturing product costs based on the manufacturing service's purchase price and the actual cost of ingredients using Katana.
After completing a Sales order (SO), you can track the profitability of sales. The Done Sales orders table displays sales revenue, Cost of Goods Sold (based on the Average Cost for products sold), and Profit for each SO. Read more
The OPO cost for products is the sum of the purchase price and ingredient costs. You can define a default purchase price and ingredients for each product variant on the item card.
Purchase price
Purchase price is the price that a contractor charges for the manufacturing of ordered products. The purchase price can be in a different currency than the base currency. Read more
Ingredient costs
After a product is added to an OPO, the default ingredients are pulled to that OPO's Track ingredients tab from the product recipe of the product variant.
The Cost for ingredients on an OPO equals the Average cost of the ingredient in the Tracking location Stock multiplied by the total quantity of the ingredient used for the OPO. Ingredients cost is always in base currency.
Since the Average Cost for an ingredient changes over time (e.g. material is purchased at different prices), the costs for a product will change accordingly.
If an Ingredient is unavailable in Stock and the In stock quantity for the ingredient is 0, the Average cost for the ingredients will also be 0. In these cases, an OPO will initially display the Default purchase price of the ingredient as the Cost. If the OPO is then completed while the ingredient is not in stock (NOT RECOMMENDED), then 0 cost will be used for this ingredient for the product cost calculations.
You can edit the ingredients on the OPO. Add, remove or change ingredients if you are using different components than defined in the default Product recipe for the product.
Cost per unit
For products with a recipe / BOM added to the OPO, Katana calculates the product cost per order unit in base currency.
The calculation formula is Product cost per unit = (Total price in base currency + Product total ingredient cost) / Order quantity.