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GP based on GST excl. sell and GST incl. cost

TheRob

Have I done something wrong in my MYOB setup?

When I look at Business Insights Item Profit margin it shows the Sell Price excluding GST, but the Buy price is Inclusive of GST. The screen shots below all relate to the same product.

If I buy this product for 74.569 including tax, that means it’s 67.79 excluding GST

If I then sell it for 97.20 + GST my GP is 29.41

According to my calculator that means my % profit on sell price is 29.41 / 97.20 = 30.26%

According to MYOB I have made 22.631 profit which is 22.631 / 97.2 = 23.3% profit.

Can MYOB be setup to show GP exclusive of GST?

As shown in Business Insights - GP is based on GST inclusive cost and GST exclusive Sell

Cost price includes GST

Sell price excludes GST

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Accepted answers

TheRob

After consulting with the Product Specialist, he confirmed that the MYOB calculation is wrong, and has been for many years, but seemed disinterested in doing any more than referring it to the development team to consider. I guess I wait and see how long, if ever, MYOB take to fix this accounting error in the Business Insights section of their accounting software.

All comments

TheRob

Just to make clear the issue, following is an actual screen print of a product we sell showing what displays and what is WRONG. The list should show both cost and sell based on GST Exclusive prices and calculate the profit based on the difference, not the difference between the GST inclusive Buy price and GST Exclusive Sell price.

TheRob

Hi Doreen,

I have presented this to the team and there is no resolution. Their response was that "Currently, we have no options on changing the mathematical programming of MYOB products. " and that "this is a great idea to suggest to our developers’ team".

I think an accounting package that doesn't incorrectly calculate Business Insights is more than a "great idea", I think it is an imperative, but it seems accuracy in calculations doesn't seem to be as important as I thought it should be.

Doreen_P

Hey there @TheRob,

To check if there's any incorrect setup or setting, please reach out to our support team directly via our virtual assistant MOCA or by submitting a support case via MyAccount.

Best regards,

Doreen

TheRob

Hi Genreve_S,

Thanks for your response, however I believe that this is actually either a programmed mathematical/accounting error, or I have some incorrect setting that needs to be fixed. If its a programming error, I don't think any votes should be needed to fix it, so I am assuming I have a wrong setting somewhere that I need to fix. If this is the wrong forum for that, I request some guidance.

To help demonstrate the error, I have reproduced a basic scenario. Bear in mind that my assumptions are based on the following formulas:

GROSS PROFIT(excl. GST) = REVENUE (excl. GST) - COST (excl. GST)

GROSS PROFIT MARGIN = GROSS PROFIT(excl. GST) ÷ REVENUE (excl. GST) X 100%

Mathematically GROSS PROFIT MARGIN would give the same result if GROSS PROFIT and REVENUE were both calculated using GST inclusive figures. The problem is that MYOB uses GST inclusive cost and GST exclusive Sell.

MYOB.jpg

TheRob

Hi Genreve_S,

To help demonstrate the error, I have reproduced a basic scenario. Bear in mind that my assumptions are based on the following formulas:

GROSS PROFIT(excl. GST) = REVENUE (excl. GST) - COST (excl. GST)

GROSS PROFIT MARGIN = GROSS PROFIT(excl. GST) ÷ REVENUE (excl. GST) X 100%

Mathematically GROSS PROFIT MARGIN would give the same result if GROSS PROFIT and REVENUE were both calculated using GST inclusive figures. The problem is that MYOB uses GST inclusive cost and GST exclusive Sell.

Genreve_S

Hi @TheRob,

Currently, there is no option to customize the Business Insights Item Profit Margin. I recommend running reports to find GP values if you need to be specific about the information you want to produce.

For now, I recommend creating a suggestion on the Ideas Exchange board so that users may vote for it for future updates.

Thanks,

Genreve