How EZ Process Pro Calculates Cost

In this article, we will discuss how the cost is calculated within EZ Process Pro.

If you have any additional questions, concerns, or issues please reach out to our support team at Support@ezprocesspro.com or call us at 713-568-1331 opt 2.

FINANCIAL COST for Financials: Income Statement (cost of goods sold on STATIC or DELIVERED ACCRUAL), Asset Report, Inventory Movement Report, Item Report.

IF YOU THINK SOMETHING IS OFF, ALWAYS CHECK YOUR INVENTORY MOVEMENT REPORT.

True cost in financials uses FIFO, including freight. (First In, First Out):

This value comes from the check-in records, which come from First Time Inventory, Receiving Purchase Order & Entering the invoice for that Purchase Order, which will reflect the proper asset value of the item (YOU MUST MARK THE PURCHASE ORDER AS PAID IN THE SOFTWARE), retake inventory, bring back memos and transfer memos.

Examples:

JAN 1, 2023 - You check an item to first-time inventory... B45 Headboard at $400. Note that you can either add the value when you check the item in or if you choose not to, it will instead use the default cost entered into the system for the item when the item was added, since there is no other cost to pull from.
JAN 15, 2023 - You receive a purchase order and enter the invoice for the PO B45 Headboard $400 + $50 Freight and Fees = $450.
FEB 20, 2023 - You receive a purchase order and enter the invoice for the PO B45 Headboard $400 + $70 Freight and Fees = $470.

AT THIS POINT, YOU LOOK AT YOUR INVENTORY MOVEMENT REPORT. YOU WILL SEE 3 CHECK-IN RECORDS MATCHING THE ABOVE! YOUR INVENTORY VALUE IN YOUR ASSET REPORT WILL BE - 3 items totaling $1320.

MARCH 4, 2023 - You deliver 1 B45 Headboard. THE INVENTORY MOVEMENT REPORT WILL SHOW A CHECKOUT RECORD OF THE OLDEST ITEM LEAVING FIRST, SO THE B45 HEADBOARD CHECKOUT WILL SHOW $400. YOUR INVENTORY VALUE IN ASSET REPORT WILL BE -2 items totaling $925.
On March 15, 2023, you brought back the delivered item. THE INVENTORY MOVEMENT REPORT WILL SHOW A CHECK-IN RECORD OF THE SAME ITEM THAT LEFT. THE B45 HEADBOARD CHECK-IN WILL SHOW $400. YOUR INVENTORY VALUE IN ASSET REPORT WILL BE -3 items totaling $1320. NOTE: THE SYSTEM KNOWS WHICH ITEM YOU ARE BRINGING BACK AND WHAT IT WAS CHECKED OUT AT, SO IF YOU CHECK IT BACK IN, IT BRINGS IT BACK AT THAT SAME VALUE.

EDITING INVOICE:

If you found you made a mistake when checking in an item (you put it at the wrong cost) but it has already been checked out and delivered to a client, you must take the following steps in this order to correct the issue and have everything re-align

Edit the invoice where the asset came from
Generate a Bring-Back memo
Re-deliver the asset

SALES COST for sales-related reports:

Tagging, system selling price, cost list, cost code, and commissions as well as any report seen by sales or sales management such as personal area, and text sales report.

The system handles costs differently in these areas so that the business owner may choose what cost they want their pricing and commissions to be based on. They may have bought a large quantity of a specific item to get a lower cost, but then have massive overhead/additional expenses in warehousing, damage, and theft. So they may not want to pass the true cost on to the customer or team.

In system settings page 1 section IV the business selects how they want the sales cost to be calculated (please see the video explanation and knowledge base explaining it here)

The options in settings are to use :

Default Cost - this is the cost uploaded from spreadsheets; added in GETTING STARTED - ADD GROUP or EDIT GROUP; auto from a vendor data feed; or modified in ADJUSTMENTS -CHANGE SALES COST

Last Recorded - this comes from the last check-in record and will align with the check-in records on the inventory movement report (as long as you have not added padding in system settings). It would be from Default Cost or the last check-in record (first-time inventory, receive a PO and enter/ pay invoice, bring back memo, transfer memo)

Highest Recorded - this comes from the HIGHEST check-in record and will align with the check-in records on the inventory movement report (as long as you have not added padding in system settings) It would be the HIGHEST VALUE from Default Cost or the last check-in record (first-time inventory, receive a PO and enter/ pay invoice, bring back memo, transfer memo)

These numbers can all be affected by an additional choice in settings "Add a percentage to default, highest recorded or last recorded cost before calculating commission or sales price". (NOTE if this rate is adjusted it is a live change and will affect all unposted commissions from that point forward. Cost records on non-financial reports will adjust also)

Adjustments can be made to these through the Management- Adjustments - Change Default Cost OR Management- Adjustments - Change Sales Cost

In addition to this, you can also check the cost of the item sold by going to Management > Reports > Financial Reports > Income Statement Reports. You will want to select Accrual Based > Static Statements Only Include Delivered Sales as Income > Select the location