Actual vs. Theoretical Report


What is it doing? 

This report details the variances between your actual inventory usage (based on two inventory counts) and theoretical usage (based on inventory item sell-throughs from POS integration and production events when applicable). The variances point out things like unrecorded waste, theft, or over-portioning.

To run this report, you'll need: 2 inventory counts, all of your orders received (or invoices scanned), recipes built, and waste & production logged.

Why should I use it? and how often?
  1. You should use this report when other reports indicate an issue.
    This is the drill-down to getting to the bottom of an issue. Usually, you'll discover the issue on your COGs report.
  2. This report can also help you follow up on your daily tasks (or your employees' performance on those) - since it takes EVERYTHING we do in MarketMan into one place.
  3. This is a great report to take piece by piece- identify a category or group of items you want to start with. By analyzing this report regularly (either weekly or monthly) you can figure out what the issues are with those items and solve them! Then repeat the process for other categories/groups of items. 
HOW TO - Step by Step
  1. Go to "Inventory" > "Actual vs Theoretical"
    First- we select the 2 counts (they will be the green (opening) and blue (closing) dates on the calendar) that will be our opening and closing counts for the report,
    Then click on "Run Report":
    *When choosing dates, note that a day-end count makes the following day relevant for starting date, and a day-start count makes the previous day relevant for end of period.
    **After you choose your dates, you can choose to run the report with only items that have been counted on both counts. This is a great way to only include specific items or categories!
  2. This report can be viewed in 3 ways: overall, by category, and by inventory item. 
  3. Overall variance information: mceclip1.pngThis top section will show you: 
    -Overall sales: this reflects the overall sales numbers for this time period as brought in from your POS
    -Actual usage: opening inventory + purchases - closing inventory for all items added up
    -Actual gross profit: sales - actual usage
    -Theoretical usage cost: blended average cost of your recipes *** This is big! no longer will theoretical usage in A vs T be just based on main item price but instead a blended average. Yes, this might lead to some differences between the menu profitability report and A vs T when it comes to theoretical usage
    -Theoretical gross profit: sales - theoretical usage cost
    -Variance value: value of the overall variance between the actual and theoretical usage
    -Gross profit variance: variance between the actual gross profit and theoretical gross profit
    -Variance excluding waste: the variance amount once you factor waste into that 
    -Variance %: overall variance % between actual and theoretical usage
  4. Category variance information:
    *It's important to note that before you review the category actual vs theoretical section, you should go up to the top of the report and click the gear icon to match up your categories. This process is exactly the same as matching up the COGS categories. Also note that any changes you make here with the gear icon will reflect in the COGS report and any changes made in the COGS gear icon will reflect here! So theoretically this should already have been done with your COGS report but you can adjust as needed! 
    You can see both a bar graph and table of the category information. The bar graph will show both the actual usage information and the theoretical usage information. 

    The table will show each category and break down the actual usage, actual usage %, actual gross profit, theoretical usage, theoretical usage %, theoretical gross profit, theoretical gross profit %, category variance, gross profit % variance, variance excluding waste and variance % excluding waste. 

Inventory item information:
The report loads with all of the items that were counted at least in one of the selected counts. 
For each item, we have available ALL inventory movement for the selected period. To dig into the actual usage just hover over and click the calculator just like on COGs!

Buyer: Location/ Restaurant name 

Category: The category that the inventory item is in

Inventory Item/preparation: The inventory item/preparation name

UOM: The unit of measurement of the inventory item or preparation

Actual Usage QTY:
Opening inventory + purchases - closing inventory
Note: If there is no closing count, the usage will be based on purchases alone (just like the COGS report)

Actual Usage Cost:
The value of the actual usage.
This is the average blended cost for all Inventory counts, Purchases, and Transfers for the period observed. 

Sales Usage:
Overall quantity used based on sales and recipes

Production event:
Quantity used based on production event

Cost by blended average:
The average costs per UOM of this item during the time period observed

Theoretical Usage Cost:
The average blended cost, multiplied by the sales usage

Variance QTY: Theoretical usage - Actual usage = Sales usage - Open inv. - purchases - production + Closing inv. = (sales usage - production) - (Open inv. + purchases - closing inv)

Variance value:
The difference between the theoretical usage value and actual usage value 

Variance %:
variance qty divided by the actual usage qty

Recorded Waste:
How much of this item was wasted per recorded waste events

Variance excluding Waste:
The variance amount once recorded waste is factored 

COGS category:
Category of this item according to calculation on the COGS report.
Note: This can be changed by selecting the gear icon on the top right 

How to customize your report view: Click the three lines on the top right-hand side of the inventory item table, hover over columns, and then you can select or deselect whichever columns you'd like to see on the report!


  1. Take a look at the variances - 
    For each line that raises your suspicion, you should double-check the columns below
    - Check for ZEROS (Did I forget to receive an order? Did I forget to count?)
    - Check for abnormal numbers (Are any numbers unrealistically high or low?)
    - Missing waste event?
    - Over portioning? 
    - Theft?
    - View the cheat sheet below to cross-check this report.

  2. Your variances (after eliminating technical issues with the cheat sheet) are items that left your inventory, but we don't know why.
    It might be a missing waste event, over portioning, or theft.
Extra tips - from the experts!
  • When looking at variances, the goal of this report is not to get "all 0" - this will probably never happen. The goal is for you to be able to explain the variance.
    If you're looking at a 5lb banana variance and you say "oh yes, that was the rotten box" - then that's all you need. This is not a "real" variance since you know how to explain it.

  • Sort the report by variance % or variance value to see which items have the biggest variances that affect you most. (Just click on the column header)
    You can also use the search option under "category" to view only a specific category:




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