PO65 - Average Cost & GL Accounts

  1. Average Cost:

    • The system determines whether or not there is stock remaining for a Receipt (being adjusted in PO65) by examining the Quantity on Hand (QOH) less any subsequent Receipts for each Product.

      • If the result is positive, then some or all of that Receipt is deemed to be in stock and the Average Cost is revised.

      • If the result is negative, then all of the stock is deemed as having been sold and no change is needed for the Average Cost.

      The following example demonstrates how PO65 determines if any stock remains for a Receipt, which in turn dictates if the Average Cost for each Product needs to be revised:

    Scenario Current QOH Receipt #1 Subsequent
    Receipt #2    		 Adjusted QOH
    (Current - R#2)    		 Qty Remaining
    1 1200 1000 n/a 1200 1000
    2 400 1000 n/a 400 400
    3 800 1000 500 300 300
    4 1100 1000 1500 (-400) 0

  2. GL Accounts Affected:

    • If 'Receipts Accrual Processing' is selected in Company Control Initialization (CC00/Purchasing), entries are written to the General Ledger for the adjusted values. The affected GL Accounts are set up in CC00/Purchasing and Maintain Purchasing Tables (PO09/Landing Factors). The GL Accounts that are updated depend on whether stock for the Receipt being recosted is still in inventory or has already been sold. (Note: Although you do not have to modify the Average Cost for a Product that is no longer in Inventory, the system automatically adjusts the appropriate GL Accounts even when the Product is deemed no longer in stock.)

      The following table displays the GL entries generated from the original Receipt and the entries generated as a result of revised Landing Factors (multiple PO65 scenarios are depicted):

      Account Updated GL Account Source Program
    Original Receipt DR Inventory CC00/Purchasing/GL
      CR Receipts Accrual CC00/Purchasing 'Receipts Accrual'
      CR Landing Factors Absorbed PO09/Landing Factors 'GL Account'
    Add/Increase a Landing Charge: Stock Still in Inventory DR Inventory
         		 CC00/Purchasing/GL
     
      CR Landing Factor Variance PO09/Landing Factors 'Variance Account'
    Add/Increase a Landing Charge: No Stock Remaining
         		 DR COS Recost Variance
         		 CC00/Purchasing 'COS Variance (Recost)'
     
      CR Landing Factor Variance PO09/Landing Factors 'Variance Account'
    Add/Increase a Landing Charge: Portion of Stock Still in Inventory DR Inventory
         		 CC00/Purchasing/GL
     
      CR Landing Factor Variance PO09/Landing Factors 'Variance Account'
      DR COS Recost Variance CC00/Purchasing 'COS Variance (Recost)'

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