Cost of Goods Sold in Demand Planner

Cost of Goods Sold - COGS - can be added as a metric into various reports in Demand Planner, such as the Inventory KPI report. The figure is calculated as the number of units sold multiplied by unit cost.

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How COGS are calculated

Once sold products are shipped to the customer, the cost of the items is taken from the goods movement in Brightpearl. In other words, the FIFO cost is used.

However, if a sales order has been raised in Brightpearl but hasn't yet been shipped, then the default cost price list price is used instead.

Example

To demonstrate how the calculated COGS can change depending on the shipping status of the sold items, let's follow an example.

I add a new SKU into Brightpearl, with a cost price of £1. I then raise a PO for 10 items. The supplier offers a discount of 10%, making the unit price 90p on that PO. I don't update the price list. I then receive the inventory.

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At this point, the COGS are still £0 as I haven't sold any units.

COGS = (units sold not shipped * cost price list) + (units shipped * FIFO price)
= (0 * £1.00) + (0 * TBC)
= £0

If sales orders are then created for all 10 items, the units sold not shipped increases:

COGS = (10 * £1.00) + (0 * TBC)
= £10.00

Once data is synced from Brightpearl, the COGS metric in Demand Planner will now show estimated costs using the cost price list price.

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Next, I fulfil and ship five of the items on order:

COGS = (5 * £1.00) + (5 * £0.90)
= £9.50

We now have a combination of estimated and realized costs making the total COGS £9.50.

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Finally, I ship the remaining five items:

COGS = (0 * £1.00) + (10 * £0.90)
= £9.00

This is the final, realized cost of goods sold for this batch. 

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