Cost of Goods Sold (COGS) is the cost of producing the products sold by the company. The amount of COGS is based on how much cost of production such as raw materials, labor wages, distribution cost, etc. The cost of goods sold is also referred to as the "Cost of Sales"
On DealPOS, there are 3 calculations for COGS when doing Re-Stock products. These are Manual, Average, and Last Order. You can choose one of these calculations according to your needs. To set up the COGS for your company, you can follow the steps below.
Table of Content :
I. How to Configure
Step 1. Go to Setup Menu and Click More Menu then choose Module
Step 2. Choose the "Buy" tab menu, then you can set COGS Calculation
COGS Calculation :
You can see the table below to see how those three kinds of COGS calculations will work according to your needs:
Column | Description |
Manual | Manual Calculation, The products cost will be set according to the buying cost that has already been entered the first time when you add the products |
Average | Average Calculation, The products cost will be calculated according to these formulas =
|
Last Order | The product's cost will be set according to the Last Buying Cost from the products |
*FIFO | COGS according to the first order |
Notes :
Currently, DealPOS cannot support the FIFO calculations for COGS anymore.
II. How the COGS Work
The example below will tell you how those 3 types of COGS will work:
Manual COGS:
Step 1. Set the COGS to Manual as shown in the first step above. Go to Product set the product buying cost
For the example, we try to set the product "Meeting Table" Buying Cost to Rp200.000
Step 2. Buy the product in the Buy menu with a different Buying Cost from the Buying cost product
Then we bought the product for 1 qty, but with different Buying Cost, the new Buying cost is Rp250.000.
Step 3. Go to product, see the variant detail from that product
The buying cost from that product will not be changed and always be the same as the first time we input the Buying Cost product when we create the product
Average COGS
Step 1. Set the COGS to Average as shown in the first step above. Go to Product and set the product buying cost
For the example, we try to set the product "Meeting Table" Buying Cost to Rp200.000
Step 2. Buy the product in the Buy menu with a different Buying Cost from the Buying cost product
Then we bought the product for 1 qty, but with a different Buying Cost, the new Buying cost is Rp300.000.
Step 3. Buy the product for the 2nd time in the Buy menu with a different Buying Cost from the Buying cost product
After the first purchase, then we bought the product for 1 qty again, but with a different Buying Cost than before, the new Buying cost is Rp100.000.
Step 4. Go to product, see the variant detail from that product
The buying cost from that product will be changed according to the average Buying cost from those 2 Purchase transactions with different buying costs. As you can see from the image above, the product's cost is changed to Rp200.000 after we've made 2 Purchases with different Costs. The first purchase was Rp300.000 and the 2nd purchase was Rp100.000. Then, the calculation will be like this:
{( Last Price * Old qty + New Price * New qty ) / (Old qty + New qty)}The first transaction counted as this:
(0*200,000) + (1*300,000) / (0+1) = 300,000
And the second transaction counted as this:
(1*300,000) + (1*100,000) / (1+1) = 200,000
Then the final result from that product's Buying cost will be set to Rp200.000
Last Order COGS
Step 1. Set the COGS to the Last Order as shown in the first step above. Go to Product and set the product buying cost
For the example, we try to set the product "Meeting Table" Buying Cost to Rp200.000
Step 2. Buy the product in the Buy menu with a different Buying Cost from the Buying cost product
Then we bought the product for 1 qty, but with a different Buying Cost, the new Buying cost is Rp300.000.
Step 3. Go to product, see the variant detail from that product
The buying cost from that product will be changed according to the Last Buying Cost that we set before when making a Purchase Transaction with a different cost.
You might like to read these related articles below :
If you want to make 2 steps for buying process (proposed - approve), you can read the article here : How to Activate Approval when using Buy (2 Steps)
If you want to make a Purchase Return, you can read the article here : Purchase Return
If you want to make the Supplier name required when buying, you can read the article here : Supplier Required in Buy Menu
