NSC | Understanding Estimated Gross Profit Calculation on Sales Order Line Items

Scenario:
The user noticed that the Estimated Gross Profit field on Sales Order line items was using an outdated item cost even after the purchase price increased significantly. Although new inventory had already been received at the higher cost, the estimated gross profit calculation continued using a lower cost value.

Solution:
The Estimated Gross Profit field on Sales Orders is calculated using:

Estimated Gross Profit = Amount - Estimated Extended Cost

Where:

• Amount = Rate × Quantity
• Estimated Extended Cost = Quantity × Estimated Item Cost

For inventory items, the estimated cost is typically based on the item’s current Average Cost rather than the most recent purchase price.