Cost of Goods Sold (COGS) Validation and Analysis

Calculation

The formula for calculating COGS is:

• Starting inventory + purchases - ending inventory = cost of goods sold.

The formula for calculating COGS % of sales: 

• Usage $ Total / Total Sales for that category *100 gives you the % of Sales for that Category

Order-Based COGS Reconciliation

For ingredient Costs, COGS will show the FIFO First In First Out Case Price.

This report is an important tool for validation only for Customers Running Order Based Purchases.

• To first determine where discrepancies are, we recommend starting with COGS Reconciliation Report.

• This report will show you the difference between your COGS (Orders) $ and Invoice $

•  Then use Cost of Goods Sold Roll Up to View

  • Usage by Account by Store

  • Item Level Cost by Store

Purchase Price  

For customers running an Orders based Cost of Goods purchase price comes from 3 types of orders received listed below:

• E - Orders Received via How do I receive electronically placed orders with ‘Exceptions’ & what does that mean?

  • Manually received off the E-Invoice for E- Distributor 

  • Cost of Goods report will use Invoice Price for Orders Received via How do I receive electronically placed orders with ‘Exceptions’ & what does that mean?

• E - Orders Received via Ordering Home > Orders to Be Received 

  • Cost of Goods report will use Order Price 

• All other Manual Distributors

  • Need to have an Order created and received to appear in your Cost of Goods purchases.

  • Need to have an Invoice created at the time of Manual receive to report to your Budget

    Navigate to Ordering Home > Enter Manual Receive > From Order Guide > Check the Box Create Invoice at the time of Receive.

Validate Orders and Invoices

• Check for accuracy on all Orders and Invoices received.

• Check each Invoice posted to Invoice History has a PO # from and Order Received.

  • Order PO # can be retrieved from Order History.

  • Select Edit from Invoice History to add a missing POT #.

Ensure all Data Entry is Correct

Invoice-Based Cost of Goods Sold Reconciliation

Purchase Price  

For customers running an Invoice based Cost of Goods, the purchase price comes from Invoices Received by Distributor and Account 

• E - Orders Received via How do I receive electronically placed orders with ‘Exceptions’ & what does that mean?

  • Manually received off the E-Invoice for E- Distributor 

  • Cost of Goods report will use Invoice Price for Orders Received via How do I receive electronically placed orders with ‘Exceptions’ & what does that mean?

  • E-Invoices will show item level detail in the Cost of Goods Report Purchase Detail 

•  Manual Distributors

  • Invoices are Entered 2 ways:

    • Navigate to Ordering Home > Enter Manual Receive > From Order Guide > Check the Box Create Invoice at the time of Receive.

    • Or navigate to Operations > Purchases > Invoice Entry 

  • Cost of Goods report will display the total cost by Account

  • Invoices from Manual Distributors will not show item level detail in the Cost of Goods Report Purchase Detail 

Updating Cost of Goods Sold Reporting

Correcting Cost of Goods Sold on Inflated Item Cost Detail:

Example: Ketchup Packets is extending the total cost to $25,849.82

• Is there an accurate price?

• Is there an accurate count or qty?

  • If yes:

    • Check the bid file Inv Mx for accuracy

    • Correct the bid file Inv Mx

  • To Update the Current Week

    • Navigate to DL Updates > Run COGS update for the current week

Update Historical COGS Reporting

Once you have corrected the bid files and identified all items needing a Cost of Goods update, you will want to submit a support ticket by visiting the Decision Logic Help Center.

• Date Range to update items

• Ingredient Names to be updated

• Stores Impacted

COGS FAQ

How is the COGS quantity calculated?

Example; your bid file has an Inventory Multiplier of 25 pounds per case on Chicken Breasts. You Inventory 220 pounds of Chicken Breast.

The COGS report will take the inventory count for the raw product, plus the quantity included in prepped items, and divide it by the Inventory Multiplier (which in this case is 25) to get the converted Case Quantity:

You also can find the total quantity on your IvA report which shows:

Chicken, Breasts at 220 pounds, plus Chicken Marinated 68 pounds, divided by the Inventory Multiplier, equals the converted Case Quantity:

220 + 68 / 25 = 11.52 Qty

My reporting does not look correct, what should I do?

You will want to verify that the received date on your orders is correct and fall into the week you are expecting them to report in. 

You will want to review your COGS report and determine what ingredient on the report looks inaccurate.

Then you will want to go to Maintenance > Product > Ingredient Management > search for the item > hover over the line item and right-click with your mouse > select Mapping Info > and review the price and bid file mapping. Make any bid file corrections if needed (and then run a DL Update for the COGS for the current week).

If the bid file price is different than the price on your COGS report then we can run a COGS update for you. If the Case conversion is not correct then we can run a COG update for you.

If you need a COGS update, you will need to provide all of the following information: the Ingredient, the Distributor, the DC Item #, what looks incorrect, what changes were made (to the bid file, if any), what locations to include, and what date to update back to.

COGS % of Sales:

• Uses Net Sales or the Net-Net Sales from the DSR, this is dependent on Config 20.

© 2024 Knowledge Management Systems, LLC. Decision Logic. All Rights Reserved.

Table of Contents