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How Kounta Calculates Average Costs

Josh -

What we're talking about

Kounta automatically updates your product costs when you receive purchase orders. This ensures that you don't have to manually adjust your costs for regular variations in market prices.


How we calculate it

When you receive a purchase order we take the results of the last 30 days of purchasing (not 30 calendar days)

The equation looks like this

- Find the last time we purchased the product
- Sum up the total spent on purchasing this product during the last 30 days
- Sum up the total qty received during the last 30 days

Total Price Paid / Total Qty Received = Average Cost


How we use it

When you sell an item we go ahead and calculate the cost of goods/sales for that single item. This can be done in a few ways depending on the information available

Normal items with no purchasing history

Kounta finds the cost price that you set under the Product Information page and uses that to calculate the cost of the sale.

Normal items with purchasing history
Kounta find the average cost price based on your purchasing history and uses that to calculate the cost of the sale

Items with recipes/components
Kounta finds the cost or average cost of each component the multiples that by the quantity of the component used in the recipe. Then sums all those costs together to get the cost of the sale

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  • Avatar
    Dale Heger

    Great explanation!

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