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Purchase Price Variance and Inventory Valuation

  • 18 April 2023
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Hello Everyone,


I am playing around with various costing method scenarios in right now. Let’s say I enter a PO for 10 of an item at $100. This item is costed at FIFO. Let’s say the accompanying AP Bill is for $120. I understand there will be $20 going to PPV and $20 going to Purchase Accruals. The cost of the item stays at $10/unit even though the bill was for $120. Is there anyway to retroactively update that item’s cost to $12/unit for this PO/Receipt?

 

 

 

If anyone has suggestions or ideas that would be great. Maybe there is an industry standard.

Thanks

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Best answer by kristianharianja 19 April 2023, 02:37

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@podonnell11 Yes, use Inventory Account as the purchase price variance allocation mode. The $2 per unit variance will be adjusted to the receipted goods.
 

 

Userlevel 3
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@podonnell11 Yes, use Inventory Account as the purchase price variance allocation mode. The $2 per unit variance will be adjusted to the receipted goods.
 

 

I like this option a lot. It seems to work the way we need it to. 

 

Thanks!

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