Merge pull request 'Cost sales first-in-first-out per branch instead of at an average' (#7) from fix/fifo-cost-of-goods into main

Reviewed-on: #7

docs/PILOT_READINESS.md

@@ -98,7 +98,7 @@ seven findings and a retest plan. All of them are addressed on
 | F-04 No way back for deactivated products | Products page lists deactivated products under a toggle, with Reactivate. Deactivating warns about stock still on hand; that stock stays on the Stock page and can be transferred or counted out. |
 | F-05 Eggs shown as litres | Products carry a unit (L, ml, kg, g, pcs, tray, pack), chosen when the product is created and shown everywhere. |
 | F-06 No branch or staff removal | Staff: deactivate/reactivate (previous change). Branches: rename and deactivate/reactivate on the Branches page. A branch can only be deactivated once it has no stock and no active staff; its history stays in reports. |
-| F-07 Purchases shown as cost of goods | Cost of goods sold is now units sold x the product's average buying price. Purchases in the period are shown separately as "Stock purchased", with a "Cash surplus" line. |
+| F-07 Purchases shown as cost of goods | Cost of goods sold covers only units sold (now first-in-first-out per branch; see "Cost of goods sold" below). Purchases in the period are shown separately as "Stock purchased", with a "Cash surplus" line. |
 | STA-04 No invites | Staff and new branch managers can be invited: the owner or manager gets a one-time link (7 days) to send, and the person sets their own password. A new link can be made from Staff. |
 | CAT-12 Zero price, duplicates | Prices must be above zero; product names are unique per business, ignoring case. |
 | OFF-02 Local stock deduction | The till shows each product's stock and deducts every sale immediately, online or offline. |
@@ -181,10 +181,27 @@ business's data.
 - Not guarded, by design: Business (the tenant itself, always looked up by
   the session's id), UserSession, MpesaCallbackLog and StockLock.
 
+## Cost of goods sold
+
+The profit report costs sales first-in-first-out, per branch
+(`src/lib/server/costing.ts`). It replays the stock ledger in order. Each
+branch keeps queues of stock at the price it was bought at, and a sale
+takes the oldest first.
+
+- **Transfers carry their cost.** Stock moved between branches arrives at
+  what the sending branch paid.
+- **Opening stock and upward counts** are valued at the product's purchase
+  price at the time (or its first purchase price, if they came first).
+- **A sale recorded before its stock** (e.g. an offline sale before the
+  purchase was entered) is costed by the next stock to arrive at that
+  branch. Until then it counts as "units with no purchase cost on record".
+- **Stock written off** by counts or adjustments is shown as "Stock losses"
+  and deducted in net profit. It is not part of cost of goods sold.
+- Each report replays the business's whole stock history. That is fast at
+  pilot volumes; a business with years of history would want stored cost
+  layers instead.
+
 ## Still open
-- **Cost of goods is an average.** It uses each product's average buying
-  price across the business, not first-in-first-out per branch. Units sold
-  with no purchase on record are counted and flagged, but have no cost.
 - **M-Pesa, if turned on.** Only one product per payment. A prompt that
   times out still needs a manual check before taking cash.
 - **Not modelled yet:** email verification at signup, sending invites by

src/app/admin/reports/page.tsx

@@ -18,6 +18,7 @@ interface ProfitReport {
   unitsSold: number;
   costOfGoodsSold: number;
   unitsWithoutCost: number;
+  stockLosses: number;
   grossProfit: number;
   expenses: number;
   expenseCount: number;
@@ -121,8 +122,9 @@ export default function ReportsPage() {
       ["  M-Pesa", report.mpesaTotal],
       ["Sales count", report.salesCount],
       ["Units sold", report.unitsSold],
-      ["Cost of goods sold (average purchase cost)", report.costOfGoodsSold],
+      ["Cost of goods sold (FIFO per branch)", report.costOfGoodsSold],
       ["Units sold with no purchase cost on record", report.unitsWithoutCost],
+      ["Stock losses (counts and write-offs)", report.stockLosses],
       ["Gross profit", report.grossProfit],
       ["Expenses", report.expenses],
       ["Estimated net profit", report.netProfit],
@@ -248,7 +250,7 @@ export default function ReportsPage() {
                 <p className="text-xs uppercase tracking-wide text-depth-500">Cost of goods sold</p>
                 <p className="mt-1 font-display text-2xl font-bold text-depth-900">{money(report.costOfGoodsSold)}</p>
                 <p className="mt-1 text-xs text-depth-500">
-                  {report.unitsSold} units sold x average buying price
+                  {report.unitsSold} units sold, each at what its branch paid for its oldest stock (first in, first out)
                   {report.unitsWithoutCost > 0 && ` · ${report.unitsWithoutCost} units have no purchase cost on record`}
                 </p>
               </div>
@@ -272,11 +274,11 @@ export default function ReportsPage() {
                 >
                   {money(report.netProfit)}
                 </p>
-                <p className="mt-1 text-xs text-depth-500">Gross profit − expenses</p>
+                <p className="mt-1 text-xs text-depth-500">Gross profit − expenses − stock losses</p>
               </div>
             </div>
 
-            <div className="grid grid-cols-1 gap-3 sm:grid-cols-2">
+            <div className="grid grid-cols-1 gap-3 sm:grid-cols-2 lg:grid-cols-3">
               <div className="rounded-xl2 bg-white p-5 shadow-soft">
                 <p className="text-xs uppercase tracking-wide text-depth-500">Stock purchased</p>
                 <p className="mt-1 font-display text-2xl font-bold text-depth-900">{money(report.stockPurchases)}</p>
@@ -290,6 +292,15 @@ export default function ReportsPage() {
                 <p className="mt-1 font-display text-2xl font-bold text-depth-900">{money(report.cashSurplus)}</p>
                 <p className="mt-1 text-xs text-depth-500">Sales − stock purchased − expenses</p>
               </div>
+              <div className="rounded-xl2 bg-white p-5 shadow-soft">
+                <p className="text-xs uppercase tracking-wide text-depth-500">Stock losses</p>
+                <p className={"mt-1 font-display text-2xl font-bold " + (report.stockLosses > 0 ? "text-alert-600" : "text-depth-900")}>
+                  {money(report.stockLosses)}
+                </p>
+                <p className="mt-1 text-xs text-depth-500">
+                  Cost of stock written off by counts, breakage or adjustments. Deducted in net profit.
+                </p>
+              </div>
             </div>
 
             <div className="flex items-center justify-between rounded-xl2 border border-depth-200 bg-sand-100 px-4 py-3">

src/app/api/reports/profit/route.ts

@@ -6,6 +6,7 @@ import { Purchase } from "@/lib/server/models/Purchase";
 import { Expense } from "@/lib/server/models/Expense";
 import { authorize, badRequest, branchParam, MANAGERS } from "@/lib/server/auth";
 import { dayRangeNairobi, isBusinessDate, startOfMonthNairobi } from "@/lib/server/businessDay";
+import { costOfGoodsSold as fifoCost } from "@/lib/server/costing";
 
 export const runtime = "nodejs";
 export const dynamic = "force-dynamic";
@@ -15,11 +16,13 @@ export const dynamic = "force-dynamic";
  *
  * Management overview, NOT accounting (full accounting is out of the PRD's scope).
  *   Revenue            SUCCESS sales in the period
- *   Cost of goods sold units sold x that product's average purchase cost
+ *   Cost of goods sold first-in-first-out per branch: each unit sold costs
- *                      (all purchases up to the end of the period)
+ *                      what that branch paid for its oldest stock on hand
+ *                      (see src/lib/server/costing.ts)
  *   Gross profit       revenue - cost of goods sold
  *   Expenses           operating expenses in the period
- *   Net profit         gross profit - expenses
+ *   Stock losses       cost of stock written off by counts and adjustments
+ *   Net profit         gross profit - expenses - stock losses
  * Shown separately, because buying stock is not the same as using it:
  *   Stock purchased    cash spent on stock in the period
  *   Cash surplus       revenue - stock purchased - expenses
@@ -47,7 +50,7 @@ export async function GET(req: NextRequest) {
   const branchObjId = branchId ? new mongoose.Types.ObjectId(branchId) : null;
   const inPeriod = { businessId: businessObjId, createdAt: { $gte: from, $lt: to }, ...(branchObjId ? { branchId: branchObjId } : {}) };
 
-  const [salesByProduct, avgCosts, purchaseAgg, expenseAgg] = await Promise.all([
+  const [salesByProduct, cost, purchaseAgg, expenseAgg] = await Promise.all([
     Transaction.aggregate<{
       _id: Types.ObjectId;
       revenue: number;
@@ -68,12 +71,7 @@ export async function GET(req: NextRequest) {
         },
       },
     ]),
-    // Average buying price per product across the business (suppliers
+    fifoCost(auth.businessId, { from, to, branchId }),
-    // charge every branch alike), using everything bought up to period end.
-    Purchase.aggregate<{ _id: Types.ObjectId; cost: number; qty: number }>([
-      { $match: { businessId: businessObjId, productId: { $ne: null }, createdAt: { $lt: to } } },
-      { $group: { _id: "$productId", cost: { $sum: "$totalCost" }, qty: { $sum: "$quantity" } } },
-    ]),
     Purchase.aggregate<{ total: number; count: number }>([
       { $match: inPeriod },
       { $group: { _id: null, total: { $sum: "$totalCost" }, count: { $sum: 1 } } },
@@ -84,19 +82,18 @@ export async function GET(req: NextRequest) {
     ]),
   ]);
 
-  const avgCost = new Map(avgCosts.filter((c) => c.qty > 0).map((c) => [c._id.toString(), c.cost / c.qty]));
+  let revenue = 0, cashTotal = 0, mpesaTotal = 0, salesCount = 0, unitsSold = 0;
-  let revenue = 0, cashTotal = 0, mpesaTotal = 0, salesCount = 0, unitsSold = 0, unitsWithoutCost = 0, costOfGoodsSold = 0;
   for (const s of salesByProduct) {
     revenue += s.revenue;
     cashTotal += s.cashTotal;
     mpesaTotal += s.mpesaTotal;
     salesCount += s.lines;
     unitsSold += s.units;
-    const unitCost = avgCost.get(s._id.toString());
-    if (unitCost === undefined) unitsWithoutCost += s.units;
-    else costOfGoodsSold += s.units * unitCost;
   }
-  costOfGoodsSold = Math.round(costOfGoodsSold * 100) / 100;
+  const costOfGoodsSold = cost.costOfGoodsSold;
+  // Sales recorded before the stock ledger existed have no stock movement,
+  // so FIFO cannot cost them: count them as uncosted too.
+  const unitsWithoutCost = Math.max(cost.unitsWithoutCost, unitsSold - cost.unitsCosted);
 
   const stockPurchases = purchaseAgg[0]?.total ?? 0;
   const expenses = expenseAgg[0]?.total ?? 0;
@@ -111,13 +108,15 @@ export async function GET(req: NextRequest) {
     salesCount,
     unitsSold,
     costOfGoodsSold,
-    // Units sold of products never bought through Purchases: their cost
+    costMethod: "FIFO per branch",
-    // is unknown, so gross profit overstates by their cost.
+    // Units sold whose cost is unknown (no purchase price for that stock on
+    // record): gross profit overstates by their cost.
     unitsWithoutCost,
+    stockLosses: cost.stockLosses,
     grossProfit,
     expenses,
     expenseCount: expenseAgg[0]?.count ?? 0,
-    netProfit: Math.round((grossProfit - expenses) * 100) / 100,
+    netProfit: Math.round((grossProfit - expenses - cost.stockLosses) * 100) / 100,
     stockPurchases,
     purchaseCount: purchaseAgg[0]?.count ?? 0,
     cashSurplus: Math.round((revenue - stockPurchases - expenses) * 100) / 100,

src/lib/server/costing.ts

@@ -0,0 +1,194 @@
+import mongoose, { Types } from "mongoose";
+import { StockMovement, type MovementType } from "@/lib/server/models/StockMovement";
+import { Purchase } from "@/lib/server/models/Purchase";
+
+/**
+ * Cost of goods sold, first-in-first-out, per branch.
+ *
+ * The stock ledger is replayed in order. Each branch keeps, per product, a
+ * queue of cost layers (quantity at a unit cost). Stock coming in adds a
+ * layer; stock going out takes from the oldest layers first:
+ *
+ *   PURCHASE      in, at the purchase's unit cost
+ *   TRANSFER_IN   in, at the cost of the layers the sending branch gave up
+ *   ADJUSTMENT +  in (opening stock, a count that found more), at an
+ *                 estimated cost: the latest purchase price for the product
+ *                 at that time, or the first one after it if none yet
+ *   SALE          out: its cost is cost of goods sold
+ *   TRANSFER_OUT  out: its cost travels with the stock to the other branch
+ *   ADJUSTMENT -  out (breakage, a count that found less): its cost is a
+ *                 stock loss, reported separately from cost of goods
+ *
+ * Stock can go negative (an offline sale recorded before the stock it came
+ * from). The units sold short wait as a deficit and are costed by the next
+ * stock that arrives at that branch, which is where they must have come
+ * from. Units still uncosted at the end are reported as unitsWithoutCost.
+ *
+ * The replay reads the whole history, in order, so a sale is costed against
+ * what was actually on hand when it happened, whatever period is being
+ * reported; only events inside the period (and branch) are added up. A sale
+ * made short in the period is costed by stock that arrived later, even
+ * after the period ended.
+ */
+
+type Id = Types.ObjectId | string;
+
+interface Layer {
+  qty: number;
+  unitCost: number | null; // null: cost unknown
+}
+
+interface Deficit {
+  qty: number;
+  kind: "sale" | "loss" | "transfer";
+  counts: boolean; // inside the reported period and branch
+}
+
+interface Position {
+  layers: Layer[];
+  deficits: Deficit[];
+}
+
+export interface CostOfGoods {
+  costOfGoodsSold: number;
+  unitsCosted: number; // units sold in the period that have a cost
+  unitsWithoutCost: number; // units sold in the period whose cost is unknown
+  stockLosses: number; // cost of stock written off by counts or adjustments in the period
+}
+
+// Process transfers' outgoing side before the incoming side, so the cost is known.
+const TYPE_ORDER: Record<MovementType, number> = {
+  PURCHASE: 0,
+  ADJUSTMENT: 1,
+  TRANSFER_OUT: 2,
+  TRANSFER_IN: 3,
+  SALE: 4,
+};
+
+const round2 = (n: number) => Math.round(n * 100) / 100;
+
+/** Take `qty` units from the front of `layers`; returns what was taken and the shortfall. */
+function take(layers: Layer[], qty: number): { taken: Layer[]; short: number } {
+  const taken: Layer[] = [];
+  let need = qty;
+  while (need > 0 && layers.length > 0) {
+    const head = layers[0];
+    const n = Math.min(head.qty, need);
+    taken.push({ qty: n, unitCost: head.unitCost });
+    head.qty -= n;
+    need -= n;
+    if (head.qty === 0) layers.shift();
+  }
+  return { taken, short: need };
+}
+
+export async function costOfGoodsSold(
+  businessId: Id,
+  period: { from: Date; to: Date; branchId?: Id | null }
+): Promise<CostOfGoods> {
+  const biz = new mongoose.Types.ObjectId(businessId.toString());
+  const branchFilter = period.branchId ? period.branchId.toString() : null;
+
+  const [movements, purchases] = await Promise.all([
+    StockMovement.find({ businessId: biz })
+      .select("branchId productId type quantity refId createdAt")
+      .sort({ createdAt: 1, _id: 1 })
+      .lean(),
+    Purchase.find({ businessId: biz, productId: { $ne: null } })
+      .select("productId unitCost createdAt")
+      .sort({ createdAt: 1 })
+      .lean(),
+  ]);
+  movements.sort(
+    (a, b) => a.createdAt.getTime() - b.createdAt.getTime() || TYPE_ORDER[a.type] - TYPE_ORDER[b.type]
+  );
+
+  const purchaseCost = new Map(purchases.map((p) => [p._id.toString(), p.unitCost]));
+  const priceHistory = new Map<string, { at: number; unitCost: number }[]>();
+  for (const p of purchases) {
+    const key = p.productId!.toString();
+    if (!priceHistory.has(key)) priceHistory.set(key, []);
+    priceHistory.get(key)!.push({ at: p.createdAt.getTime(), unitCost: p.unitCost });
+  }
+  const estimateCost = (productId: string, at: number): number | null => {
+    const history = priceHistory.get(productId);
+    if (!history || history.length === 0) return null;
+    let latest: number | null = null;
+    for (const h of history) {
+      if (h.at <= at) latest = h.unitCost;
+      else break;
+    }
+    return latest ?? history[0].unitCost;
+  };
+
+  const positions = new Map<string, Position>();
+  const position = (branch: string, product: string) => {
+    const key = `${branch}:${product}`;
+    if (!positions.has(key)) positions.set(key, { layers: [], deficits: [] });
+    return positions.get(key)!;
+  };
+  const inTransit = new Map<string, Layer[]>(); // transfer refId -> layers given up by the sender
+
+  const result = { costOfGoodsSold: 0, unitsCosted: 0, unitsWithoutCost: 0, stockLosses: 0 };
+  const charge = (kind: Deficit["kind"], layers: Layer[]) => {
+    for (const l of layers) {
+      if (kind === "sale") {
+        if (l.unitCost === null) result.unitsWithoutCost += l.qty;
+        else {
+          result.costOfGoodsSold += l.qty * l.unitCost;
+          result.unitsCosted += l.qty;
+        }
+      } else if (kind === "loss" && l.unitCost !== null) {
+        result.stockLosses += l.qty * l.unitCost;
+      }
+    }
+  };
+
+  for (const m of movements) {
+    const branch = m.branchId.toString();
+    const product = m.productId.toString();
+    const pos = position(branch, product);
+    const at = m.createdAt.getTime();
+    const counts =
+      at >= period.from.getTime() && at < period.to.getTime() && (!branchFilter || branch === branchFilter);
+
+    if (m.quantity > 0) {
+      let incoming: Layer[];
+      if (m.type === "PURCHASE") incoming = [{ qty: m.quantity, unitCost: purchaseCost.get(m.refId) ?? null }];
+      else if (m.type === "TRANSFER_IN") incoming = (inTransit.get(m.refId) ?? [{ qty: m.quantity, unitCost: null }]).map((l) => ({ ...l }));
+      else incoming = [{ qty: m.quantity, unitCost: estimateCost(product, at) }];
+
+      // Stock that was already sold short is covered first, at this stock's cost.
+      while (pos.deficits.length > 0 && incoming.length > 0) {
+        const d = pos.deficits[0];
+        const { taken, short } = take(incoming, d.qty);
+        if (d.counts) charge(d.kind, taken);
+        d.qty = short;
+        if (d.qty === 0) pos.deficits.shift();
+      }
+      pos.layers.push(...incoming);
+    } else if (m.quantity < 0) {
+      const kind: Deficit["kind"] = m.type === "SALE" ? "sale" : m.type === "TRANSFER_OUT" ? "transfer" : "loss";
+      const { taken, short } = take(pos.layers, -m.quantity);
+      if (kind === "transfer") {
+        // The receiving branch inherits this cost; any shortfall arrives with no known cost.
+        inTransit.set(m.refId, short > 0 ? [...taken, { qty: short, unitCost: null }] : taken);
+      } else if (counts) {
+        charge(kind, taken);
+      }
+      if (short > 0) pos.deficits.push({ qty: short, kind, counts: counts && kind !== "transfer" });
+    }
+  }
+
+  // Short sales in the period that no later stock has covered yet.
+  for (const pos of positions.values()) {
+    for (const d of pos.deficits) if (d.counts && d.kind === "sale") result.unitsWithoutCost += d.qty;
+  }
+
+  return {
+    costOfGoodsSold: round2(result.costOfGoodsSold),
+    unitsCosted: result.unitsCosted,
+    unitsWithoutCost: result.unitsWithoutCost,
+    stockLosses: round2(result.stockLosses),
+  };
+}

tests/costing.test.ts

@@ -0,0 +1,110 @@
+import { describe, expect, it } from "vitest";
+import mongoose from "mongoose";
+import { costOfGoodsSold } from "@/lib/server/costing";
+import { StockMovement } from "@/lib/server/models/StockMovement";
+import { Transaction } from "@/lib/server/models/Transaction";
+import { Purchase } from "@/lib/server/models/Purchase";
+import { startOfMonthNairobi } from "@/lib/server/businessDay";
+import * as cash from "@/app/api/transactions/cash/route";
+import * as purchases from "@/app/api/purchases/route";
+import * as adjustments from "@/app/api/stock/adjustments/route";
+import * as transfers from "@/app/api/stock/transfers/route";
+import * as profit from "@/app/api/reports/profit/route";
+import { json, makeTenant, req, uuid, type Actor, type Tenant } from "./helpers";
+
+const ALL_TIME = { from: new Date(0), to: new Date(Date.now() + 86_400_000) };
+
+const buy = (t: Tenant, branchId: string, quantity: number, unitCost: number, productId = t.water20) =>
+  purchases.POST(req("POST", "/x", { as: t.owner, body: { branchId, supplierName: "Supplier", productId, quantity, unitCost } }));
+
+const sell = (cashier: Actor, quantity: number, productId: string) =>
+  cash.POST(req("POST", "/x", { as: cashier, body: { sales: [{ clientUuid: uuid(), lines: [{ productId, quantity }] }] } }));
+
+const adjust = (t: Tenant, mode: "COUNT" | "DELTA", quantity: number) =>
+  adjustments.POST(
+    req("POST", "/x", { as: t.owner, body: { clientUuid: uuid(), branchId: t.branchA, productId: t.water20, mode, quantity } })
+  );
+
+/** Move everything recorded so far to `when` (tests need history in an earlier period). */
+async function backdate(t: Tenant, when: Date) {
+  // The raw collection: Mongoose treats createdAt as immutable.
+  const filter = { businessId: new mongoose.Types.ObjectId(t.businessId) };
+  await StockMovement.collection.updateMany(filter, { $set: { createdAt: when } });
+  await Transaction.collection.updateMany(filter, { $set: { createdAt: when } });
+  await Purchase.collection.updateMany(filter, { $set: { createdAt: when } });
+}
+
+describe("cost of goods sold: FIFO per branch", () => {
+  it("costs the oldest stock first, not an average", async () => {
+    const t = await makeTenant();
+    await buy(t, t.branchA, 10, 10);
+    await buy(t, t.branchA, 10, 20);
+    await sell(t.cashierA, 15, t.water20);
+    const c = await costOfGoodsSold(t.businessId, ALL_TIME);
+    expect(c).toMatchObject({ costOfGoodsSold: 200, unitsCosted: 15, unitsWithoutCost: 0 }); // 10x10 + 5x20 (the average would say 225)
+  });
+
+  it("costs each branch at what that branch paid", async () => {
+    const t = await makeTenant();
+    await buy(t, t.branchA, 10, 10);
+    await buy(t, t.branchB, 10, 30);
+    await sell(t.cashierB, 2, t.water20);
+    await sell(t.cashierA, 1, t.water20);
+    expect((await costOfGoodsSold(t.businessId, ALL_TIME)).costOfGoodsSold).toBe(70);
+    expect((await costOfGoodsSold(t.businessId, { ...ALL_TIME, branchId: t.branchA })).costOfGoodsSold).toBe(10);
+    expect((await costOfGoodsSold(t.businessId, { ...ALL_TIME, branchId: t.branchB })).costOfGoodsSold).toBe(60);
+  });
+
+  it("carries the sending branch's cost with a transfer", async () => {
+    const t = await makeTenant();
+    await buy(t, t.branchA, 10, 10);
+    await transfers.POST(
+      req("POST", "/x", {
+        as: t.owner,
+        body: { clientUuid: uuid(), fromBranchId: t.branchA, toBranchId: t.branchB, productId: t.water20, quantity: 5 },
+      })
+    );
+    await buy(t, t.branchB, 5, 30);
+    await sell(t.cashierB, 6, t.water20);
+    // B's oldest stock is the 5 transferred at 10, then 1 of its own at 30.
+    expect((await costOfGoodsSold(t.businessId, { ...ALL_TIME, branchId: t.branchB })).costOfGoodsSold).toBe(80);
+  });
+
+  it("costs a sale made before its stock was recorded by the stock that arrives next", async () => {
+    const t = await makeTenant();
+    await sell(t.cashierA, 3, t.water20); // offline sale, nothing on the books yet
+    expect(await costOfGoodsSold(t.businessId, ALL_TIME)).toMatchObject({ costOfGoodsSold: 0, unitsWithoutCost: 3 });
+    await buy(t, t.branchA, 10, 12);
+    expect(await costOfGoodsSold(t.businessId, ALL_TIME)).toMatchObject({ costOfGoodsSold: 36, unitsWithoutCost: 0 });
+  });
+
+  it("reports written-off stock as a loss, not as cost of goods sold, and deducts it in net profit", async () => {
+    const t = await makeTenant();
+    await buy(t, t.branchA, 10, 10);
+    await adjust(t, "COUNT", 8);
+    expect(await costOfGoodsSold(t.businessId, ALL_TIME)).toMatchObject({ costOfGoodsSold: 0, stockLosses: 20 });
+    const { body } = await json(await profit.GET(req("GET", "/api/reports/profit", { as: t.owner })));
+    expect(body).toMatchObject({ stockLosses: 20, grossProfit: 0, netProfit: -20 });
+  });
+
+  it("values opening stock at the product's purchase price", async () => {
+    const t = await makeTenant();
+    await adjust(t, "DELTA", 10); // opening stock, before any purchase was recorded
+    await buy(t, t.branchA, 10, 15);
+    await sell(t.cashierA, 12, t.water20);
+    expect((await costOfGoodsSold(t.businessId, ALL_TIME)).costOfGoodsSold).toBe(180);
+  });
+
+  it("counts only the period's sales, costed against what was left from earlier periods", async () => {
+    const t = await makeTenant();
+    await buy(t, t.branchA, 10, 10);
+    await sell(t.cashierA, 6, t.water20);
+    const lastMonth = new Date(startOfMonthNairobi().getTime() - 5 * 86_400_000);
+    await backdate(t, lastMonth);
+    await buy(t, t.branchA, 10, 20);
+    await sell(t.cashierA, 6, t.water20); // 4 left from last month at 10, then 2 at 20
+
+    const { body } = await json(await profit.GET(req("GET", "/api/reports/profit", { as: t.owner })));
+    expect(body).toMatchObject({ costMethod: "FIFO per branch", unitsSold: 6, costOfGoodsSold: 80, unitsWithoutCost: 0 });
+  });
+});

tests/followups.test.ts

@@ -100,12 +100,12 @@ describe("F-03 report period validation", () => {
 });
 
 describe("F-07 cost of goods sold", () => {
-  it("costs only the units sold, at the average buying price, and reports purchases separately", async () => {
+  it("costs only the units sold, first-in-first-out, and reports purchases separately", async () => {
     const t = await makeTenant();
     const buy = (quantity: number, unitCost: number) =>
       purchases.POST(req("POST", "/x", { as: t.managerA, body: { supplierName: "Kiwanja", productId: t.water20, quantity, unitCost } }));
     await buy(20, 10);
-    await buy(10, 13); // average (200 + 130) / 30 = 11
+    await buy(10, 13);
     await cash.POST(
       req("POST", "/x", {
         as: t.cashierA,
@@ -116,9 +116,9 @@ describe("F-07 cost of goods sold", () => {
     expect(body).toMatchObject({
       revenue: 660, // 3 x 200 + 1 x 60
       unitsSold: 4,
-      costOfGoodsSold: 33, // 3 x 11; the 5L was never purchased
+      costOfGoodsSold: 30, // 3 x 10 from the oldest purchase; the 5L was never purchased
       unitsWithoutCost: 1,
-      grossProfit: 627,
+      grossProfit: 630,
       stockPurchases: 330,
       cashSurplus: 330,
     });