The margins calculated on Sales Orders (SO) and Quotes are calculated per order line and charge, using each product's current cost against the price provided.
If a Sales Order is showing an unexpected margin, you will want to review the product's current Average Landed Cost (ALC), Last Cost, Nominal Cost, or Cost if it's an NDP, to ensure the correct values are being used during the margin calculations.
Margin calculations for inventory-managed products
For products that track Stock on Hand (SOH), sales margins are calculated using the product's Average Landed Cost (ALC) at the time the SO's shipment was dispatched, or the current ALC if the shipment hasn't yet been completed. If a product currently has no SOH, its Last Cost will be used to calculate an advisory margin, which will be recalculated when the product is dispatched.
The formula used to calculate the sold product's margin is: % (Unit Sale Price - ALC) / Unit Sale Price.
Margin calculations for Never Diminishing Products
For products that do not track inventory, Never Diminishing Products (NDPs), sales margins are calculated using the product's Last Cost or Nominal Cost. This means you're able to account for any costs incurred for additional services provided to your Customers per Sales Order.
The formula used to calculate the sold NDP's margin is: % (Unit Sale Price - Last Cost) / Unit Sale Price.