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Profit and Loss Per Kit Component

Table of Contents

Overview

Profit and loss reports use particular calculations when it comes to kit components. Order payments are split between kit components and applied based on the component cost ratio. In other words, payments are not split evenly but applied proportionally to each component’s cost to determine the profit and loss.

When an order includes multiple items, the costs are first divided between those items at the parent level and then broken down at the component level, as shown in the example below.

To see P&L details by order and by kit component, in the Product Profit Summary or Product Profit Details report, click Add filter and select Show Product By Kit Component SKU – Yes.


Calculations

The distribution of the order payment per unit, necessary to calculate profit and loss for kit component, is done in two steps as follows:

  1. Kit Component Cost Factor = (Kit Component Cost / Sum Cost of all Kit Components)
  2. Payment Per Unit = (Kit Parent Payment * Kit Component Cost Factor) / Kit Parent Order Quantity

Example

  • Total Order Payment (Kit Parent Payment) = $50
  • Order Quantity = 2
  • Sum Cost of all Kit Components = $8

———–

  • Kit Component 1 = Test Kit Item Component 1
  • Component Quantity = 1 (in the kit product configuration)
  • Kit Component Cost = $2

 

  • Kit Component Cost Factor = (Kit Component Cost / Sum Cost of all Kit Components)
    • 2 / 8 = 0.25
  • Payment Per Unit = ((Kit Parent Payment * Kit Component Cost Factor) / Kit Parent Order Quantity
    • ((50 * 0.25) / 2 = 6.25

———–

  • Kit Component 2 = Test Kit Item Component 2
  • Component Quantity = 2 (in the kit product configuration)
  • Kit Component Cost = $3

 

  • Kit Component Cost Factor = (Kit Component Cost / Sum Cost of all Kit Components)
    • 3 / 8 = 0.375
  • Payment Per Unit = (Kit Parent Payment * Kit Component Cost Factor) / Kit Parent Order Quantity
    • (50 * 0.375) / 2 = 9.375

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