Item Cost Calculation

In CStoreOffice®, the item cost is calculated in the following ways:

• During the process of shifts parsing.
• When the Recalculate COGS button is clicked. This method is applicable only to the Item Sales by Tags report. For more information, see Recalculating COGS.

The approach for calculating item cost described in this section is applied to all reports and forms in CStoreOffice® where the item cost or cost of goods (COGS) is used.

Calculating Item Cost during Shifts Parsing

During the process of shifts parsing the item cost is calculated depending on the store inventory method activated for the account:

• Item cost calculation based in FIFO: The item cost is calculated based on the FIFO method, if the FIFO method is activated for the account.
• Item cost calculation based on the last invoice: The item cost is calculated based on the last invoices, if the FIFO method is not activated for the account.

For more information on activating the FIFO method, see How to Activate the FIFO Method in CStoreOffice®.

Calculating Item Cost based on the FIFO Method

To calculate the item cost of the sold item using the FIFO method:

1. The system takes the UPC value of the sold item.
2. Using the item UPC value, the system searches for the last physical inventory for this item.
3. Depending on the last physical inventory data, the item cost is calculated in one of the following ways:

• If the last physical inventory data is not found, the system takes the item cost from the price book. For more information, see Getting Item Cost from Price Book (FIFO Method).
• If the last physical inventory data is found, the system searches for the invoice:
• If the invoice is not found, the system takes the item cost from the price book. For more information, see Getting Item Cost from Price Book (FIFO Method).
• If the invoice is found, the invoice cost is taken as the item cost.

To learn more about physical inventory, see Non-Itemized Inventory.

Getting Item Cost from Price Book (FIFO Method)

To get the item cost from the price book using the FIFO method:

1. The system takes the UPC value of the sold item.
2. Using the item UPC value, the system searches for all VIN values of the item's vendors configured at the station level.
3. For each found VIN value:
1. The system identifies the item cost according to the following cost priorities: Promotion Cost > Negotiated Cost > Unit Cost:

• Promotion Unit Cost is taken as the item cost, if the item participates in any promotion, which is active for the current date.
• Negotiated Cost is taken as the item cost, if there are no active promotions with this item for the current date.
• Unit Cost is taken as the item cost, if there are neither active promotions with this item for the current date, nor negotiated cost configured for this item.

To view the detailed information on the current item cost values for each station on the account, you can open the item setup form on the account level and go to the Cost section. For more information, see Cost Section.

For more information about the difference between item's promotion and negotiated cost, see Setting Up Item Cost.

2. The system saves identified item cost.
4. For each item cost identified and saved during the step 3:
1. The system identifies the latest date of the item cost changes.

In case the item has several VIN values (what means that several vendors supply this item) and there are several dates found with the item cost changes, the random date from these dates is taken by the system.

2. The system saves identified date.
5. If the date identified at the step 4 is higher than the item's sale date, then the item cost value is searched by the system in the cost changes history in the following way:
1. The system searches for the item cost using the following criteria:

• The VIN value for which the date was identified and saved at the step 4.
• The nearest date prior to the item sale date.

2. In the found record with the item cost, the system takes the item cost according to the cost priorities: Promotion Cost > Negotiated Cost > Unit Cost. See more detailed description of the item cost priorities in the step 3.

For more information on analyzing the cost changes history, see Consolidated Cost Changes History Report.

Calculating Item Cost based on Last Invoice

To get the item cost from the price book based on the last invoice:

1. The system takes the UPC value of the sold item.
2. Using the item UPC value, the system analyzes the parent-child relationship settings for this item:
1. The system identifies all children for the item.
2. The system identifies all parents for the found children.
3. The system takes UPC values for all found parents.

For more information about parent-child relationship settings, see Setting Parent-Child Relationship between Items.

3. For each UPC value found at the step 2:
4. The system searches for all invoices accepted 180 days before the sale:

• If such invoices are not found, the system takes the item cost from the price book. For more information, see Getting Item Cost from Price Book (Last Invoice).
• If such invoices are found, the system identifies the latest invoice accepted 180 days before the sale. The cost from this invoice is taken as the item cost.

Getting Item Cost from Price Book (Last Invoice)

To get the item cost from the price book based on the last invoice:

1. The system takes the UPC value of the sold item.
2. Using the item UPC value, the system searches for all VIN values of the item's vendors configured at the station level.
3. For each found VIN value:
1. The system identifies the item cost according to the following cost priorities: Promotion Cost > Negotiated Cost > Unit Cost:

• Promotion Unit Cost is taken as the item cost, if the item participates in any promotion, which is active for the current date.
• Negotiated Cost is taken as the item cost, if there are no active promotions with this item for the current date.
• Unit Cost is taken as the item cost, if there are neither active promotions with this item for the current date, nor negotiated cost configured for this item.

To view the detailed information on the current item cost values for each station on the account, you can open the item setup form on the account level and go to the Cost section. For more information, see Cost Section.

For more information about the difference between item's promotion and negotiated cost, see Setting Up Item Cost.

2. The system saves identified item cost.
4. For each item cost identified and saved during the step 3:
1. The system identifies the latest date of the item cost changes.

In case the item has several VIN values (what means that several vendors supply this item) and there are several dates found with the item cost changes, the random date from these dates is taken by the system.

2. The system saves identified date.
5. If the date identified at the step 4 is higher than the item's sale date, then the item cost value is searched by the system in the cost changes history in the following way:
1. The system searches for the item cost using the following criteria:

• The VIN value for which the date was identified and saved at the step 4.
• The nearest date prior to the item sale date.

2. In the found record with the item cost, the system takes the item cost according to the cost priorities: Promotion Cost > Negotiated Cost > Unit Cost. See more detailed description of the item cost priorities in the step 3.

For more information on analyzing the cost changes history, see Consolidated Cost Changes History Report.