Let’s assume I have a sales order with a value of 30,000 with item A that cost us 5,000 to manufacture.
I sold the item, received payment, shipped it, 5 days later the customer called me and complained that the item broke during use.
We told him to throw away the broken piece and that we would send him a replacement AND another item B to retain him. Manufacture of these new items in total cost us 10,000
Originally, my profit would have been 30,000 - 5,000 = 25,000 but since I had to manufacture replacements my profit is actually 30,000 - 5,000 - 10,000 = 15,000.
How do I book this profit properly with reference to the original sales order so I understand the true profit per order due to these additional manufacturing and shipping costs I had to incur for the same order.