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Is product cost on transfer static?

Halima Duncan
Say that...on January 15 I had 2 bottles of wine valued at $10 per bottle and I transfer 1 bottle from outlet A to outlet B.   Then on January 16 I apply an invoice for a January 1 receiving of those 2 bottles of wine, and the wine was invoiced at $50 per bottle.   We use the average costing inventory setting.   Will the transfer I recorded on January 15 reflect the cost of the on hand at the time I made the transfer ($10), or will it update to reflect the increased unit cost after I adjusted the receiving ($50)?   Thank you for your help!
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Comments

6 comments

Date Votes
  • Richard Fraser Smith

    Hi @Halima Duncan​ ,

     

    Thanks for your question.

     

    The transfer will be updated and reflect the higher cost in the situation you describe above. While the transfer will initially show at the $10 value once the receiving is adjusted (for example when adding the invoice) the transfer will adjust to the higher value $50.

     

    It is worth noting that the Transfer Receipt will always display the value at the point the transfer was made (so the lower value) as this is what is generated for the time when people are agreeing the transfer. Even once the adjustment for the receiving is made this will not change.

     

    The Transfer Report will however reflect the correct adjusted price for the transfer and the stock in each outlet will be at the end received price.

     

    Regards,

     

    Rich​

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  • Richard Fraser Smith

    Hi @Halima Duncan​ ,

     

    Thanks for your question.

     

    The transfer will be updated and reflect the higher cost in the situation you describe above. While the transfer will initially show at the $10 value once the receiving is adjusted (for example when adding the invoice) the transfer will adjust to the higher value $50.

     

    It is worth noting that the Transfer Receipt will always display the value at the point the transfer was made (so the lower value) as this is what is generated for the time when people are agreeing the transfer. Even once the adjustment for the receiving is made this will not change.

     

    The Transfer Report will however reflect the correct adjusted price for the transfer and the stock in each outlet will be at the end received price.

     

    Regards,

     

    Rich​

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  • Halima Duncan

    We export our transfers using the GL interface built into Adaco; after we close the monthly period, I run the GL interface for product movement, which records all transfers and requisitions.

     

    If I transfer a product at $10 per unit value this month, and next month I post the received invoice and adjust the received cost to reflect the invoiced $50 per unit, is this additional value reflected in the next period's product movement? How does the system account for fluctuations in product value after a transfer has taken place and product movement exported? Thanks for your help!

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  • Halima Duncan

    We export our transfers using the GL interface built into Adaco; after we close the monthly period, I run the GL interface for product movement, which records all transfers and requisitions.

     

    If I transfer a product at $10 per unit value this month, and next month I post the received invoice and adjust the received cost to reflect the invoiced $50 per unit, is this additional value reflected in the next period's product movement? How does the system account for fluctuations in product value after a transfer has taken place and product movement exported? Thanks for your help!

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  • Richard Fraser Smith

    Hi {@005D0000005WERQIA4}​ 

     

    I have received the below to explain from our product team:

     

    So if in period 1 in outlet A you receive 10 bottles at $10 each and then transfer 2 bottles to outlet B. In the product movement Adaco exports a transaction for $20 debiting outlet 2 and crediting outlet A $20. The unbilled journal would export a purchase of $100 to outlet A so Outlet A has an inventory balance of $80 ($100 purchases less $20 transferred out).

    Then when closing the period, in the accounts system the unbilled accrual gets reversed so now Outlet A has an inventory balance of minus $20.

     

    Then in period 2 you post an invoice amending the price to $11 per bottle. This invoice gets exported to the accounts system and shows $110 minus $20 = $90 which is not correct as the inventory value is actually $88 (8 x $11).

     

    So Adaco creates a DIFF transaction in Outlet A for -$2 which corrects the average price in Outlet A. This transaction gets included in the inventory variance journal so the accounts system becomes aligned with Adaco again: $110 from the invoice, -$20 from the product movement, - $2 DIFF transaction in Inventory variance = $88 .

     

    I hope this helps and explains the logic!

     

    Kind regards,

     

    Rich

    0
  • Richard Fraser Smith

    Hi {@005D0000005WERQIA4}​ 

     

    I have received the below to explain from our product team:

     

    So if in period 1 in outlet A you receive 10 bottles at $10 each and then transfer 2 bottles to outlet B. In the product movement Adaco exports a transaction for $20 debiting outlet 2 and crediting outlet A $20. The unbilled journal would export a purchase of $100 to outlet A so Outlet A has an inventory balance of $80 ($100 purchases less $20 transferred out).

    Then when closing the period, in the accounts system the unbilled accrual gets reversed so now Outlet A has an inventory balance of minus $20.

     

    Then in period 2 you post an invoice amending the price to $11 per bottle. This invoice gets exported to the accounts system and shows $110 minus $20 = $90 which is not correct as the inventory value is actually $88 (8 x $11).

     

    So Adaco creates a DIFF transaction in Outlet A for -$2 which corrects the average price in Outlet A. This transaction gets included in the inventory variance journal so the accounts system becomes aligned with Adaco again: $110 from the invoice, -$20 from the product movement, - $2 DIFF transaction in Inventory variance = $88 .

     

    I hope this helps and explains the logic!

     

    Kind regards,

     

    Rich

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