Commission based on Inventory Total Profit awards commission based on the total profit of sales.
Since NetSuite determines the cost of an item either on Average cost for that Item based on prior Fulfillments or Item cost as entered on the Item record, depending on the Cost Estimate Type set on the Item record, the Actual Average Cost may fluctuate overtime.
If the Item is set as Average Costs, then Inventory profit may change over time when there are purchases of the item with a different cost. NetSuite updates the actual Costs of the item and this update will having an effect on the Inventory Total Profit.
If the Commission is by Period, then the Commission engine recalculates the Calculated Commission based on the updated Average Cost.
The Commission calculated based on Inventory Total Profit does not tie up with expected Commission Calculation because the Source transaction only shows the Est. Extended Cost and not the Actual Cost. The Est. Extended Cost is a snap shot value of the item's Cost Estimate Type which is taken upon the creation of the Source transaction.
You may select to toggle the transaction in order to update the current Cost value and NetSuite Calculated Commission will tie up with the expected commission.
For example on a Sales Order:
1. Open the Sales Order on Edit mode
2. On the Items tab, go to the specific Line Item.
3. Change Cost Estimate Type from Average Cost to Custom. Notice that Est. Extended Cost is now blank.
4. Then change it back to Average Cost. Notice that Est. Extended Cost will now show you the current cost value.
5. Notice that the Est. Gross Profit multiplied by the commission rate will now equal the Commission Calculation.