Cost Factors

Action: COSTFACT

Overview

Cost factors are percentages used to automatically compute the value of all the inventory owned. The inventory value is computed by

(Quantity on hand * (Average Cost - Vendor discount %)) * Cost Factor

A company could establish inventory depreciation criteria with the help of an CPA. The criteria are then entered within the Cost Factor form. ProfitSystem® automatically applies the Cost Factor value criteria to each inventory item/style and utilize the cost Factor in real time, meaning the moment a rule applies to an inventory entry the new cost factor will be used to compute it's value.

Most inventory reports will list and total Inventory value by style & then vendor or category. The value displayed for a style on the Inventory Statistics Tab and totaled is the value at that moment in time and can change whenever any of the cost factor rules are applied, such as marking an inventory item/style discontinued.

Criteria

Category… This cost factor applies only to items in this category.

Sub-category... The sub-category of the item

Discontinued (checkbox)…If checked, this cost factor applies only to discontinued items. If not checked, this cost factor applies only to non-discontinued items. Important: The presence of a discontinued date on an inventory item does not automatically qualify for this option. The date on the inventory item must be in the past of the current date when this is checked.

Age in days…The cost factor will apply only to items older than the age in days (as measured from the last receive date)

Received between... The inventory item's last received date must fall within the range entered. Leave blank to ignore this criteria, thus make all items qualify.

Cost factor...Enter a whole number representing the cost factor. If you want to carry this inventory item at 100 percent of cost, enter 100. If you want to carry it at 50 percent, enter 50. Example: The shop has a quantity on hand of 1. The netcost of the item is $300. The item meets a set of Cost Factor rules that uses a cost factor of 25%. In this case the item would report a inventory value of $75.