Setting Up Cost Tracking

Overview

Accurate cost tracking is the foundation of Formuley's financial tools, including Profit Guardian, margin alerts, and profitability reports. This guide walks you through entering ingredient costs, configuring your costing method, and understanding how Formuley calculates formula and batch costs. Cost tracking features are available on the Pro tier and above.

Entering Ingredient Costs

You can enter costs for an ingredient in two places:

When Adding an Ingredient

1. Navigate to Ingredients in the sidebar and click Add Ingredient.
2. Fill in the ingredient details (name, category, supplier, etc.).
3. In the Cost section, enter the price per unit and the unit size (for example, $12.50 per 500g).
4. Click Save.

When Recording a Purchase

1. Open the ingredient you want to update.
2. Record a new purchase with the purchase price, quantity, and date.
3. Formuley updates the ingredient's cost automatically based on your configured costing method.

Recording purchases over time builds a cost history for each ingredient, which Profit Guardian uses for trend analysis.

How Formula Costs Are Calculated

Formuley calculates formula costs automatically using three pieces of data:

• Ingredient cost -- the per-unit cost from your ingredient library.
• Percentage -- the ingredient's percentage in the formula.
• Batch size -- the total weight or volume of the batch.

The calculation is: (ingredient cost per unit) x (amount used in batch) = ingredient contribution to formula cost. The sum of all ingredient contributions gives you the total formula cost.

Recalculating Costs

If ingredient prices have changed since you last viewed a formula, click the Recalculate Cost button on the formula page. This pulls the latest ingredient prices from your library and updates the formula's cost breakdown.

Batch Costs and COGS

When you log a batch, Formuley calculates the cost of goods sold (COGS) for that production run:

• The batch cost is derived from the formula cost multiplied by the batch size.
• Cost per unit is calculated by dividing the total batch cost by the number of units produced.
• Batch costs feed into your profitability reports and Profit Guardian analysis.

Configuring Your Costing Method

Formuley supports three costing methods. To choose one:

1. Navigate to Settings in the sidebar.
2. Open the Cost Tracking section.
3. Select your preferred costing method:

• Weighted Average (default) -- averages the cost of all purchases, weighted by quantity. Best for most businesses with relatively stable pricing.
• FIFO (First In, First Out) -- uses the cost of the oldest inventory first. Useful if ingredient prices are rising and you want your costs to reflect what you actually paid in order.
• LIFO (Last In, First Out) -- uses the cost of the most recent purchase first. This method reflects current market prices in your cost calculations.

Your selected method applies to all ingredients across your account.

Additional Cost Settings

In the Settings page, you can also configure:

• Currency -- select your local currency for all cost displays and calculations.
• Default Profit Margin -- set a default target margin that Formuley uses when evaluating formula profitability. This value is used by Profit Guardian as the baseline for margin alerts unless you override it per formula.
• Cost Rounding -- choose how Formuley rounds calculated costs (for example, to 2 decimal places, to the nearest cent, etc.).

Step-by-Step Setup Checklist

1. Choose your costing method in Settings. If you are unsure, Weighted Average is a safe default.
2. Set your currency in Settings.
3. Enter costs for all your ingredients. Open each ingredient and add at least one cost entry. The more purchase history you provide, the more accurate your trend data will be.
4. Set a default profit margin in Settings so Profit Guardian knows what margin to protect.
5. Add selling prices to your formulas so Formuley can calculate margins.
6. Enable Profit Guardian to start receiving margin alerts. See Profit Guardian Overview for setup instructions.

Tips

• Update ingredient costs whenever you make a new purchase. Keeping costs current ensures your formula costs and margin calculations remain accurate.
• Use the Recalculate Cost button on formula pages periodically, especially after recording new purchases.
• Review your costing method if your business grows or your purchasing patterns change. Switching methods updates all future calculations but does not retroactively change past batch costs.