Worked scenario
Bought by the kilo, sold by the item, margin by guess
When the buying unit and the selling unit differ, margin per item is a calculation nobody repeats after the first time.
3 min read
Utensils are frequently bought by weight and sold by piece. The conversion is done once, at pricing, and then treated as settled.
Metal moves and prices do not
When the underlying metal price rises, the piece price stays where it was set until someone recalculates. Margin erodes silently across the whole range at once.
Hold both units
Recording weight and count against each item makes recalculation a lookup rather than an exercise, which is the difference between prices that track cost and prices that lag it by a year.
What changes
- Purchase weight and piece count both recorded per item
- Cost per piece derived rather than estimated
- Metal price movements reflected in selling prices
- Margin per line visible at current cost
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