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ManualDoc:T45A6D51BFBB74C079AC559A4240A296D

Once automatically created can be reviewed in this window.

CostAdjustment Header.png

Some relevant fields to note are:

All of them are going to be explained in detail in the following sections.

Contents

Backdated Transaction

The source of this cost adjustment is a product transaction (i.e a goods receipt) that should have been booked in a previous date, but it was not.

As a consequence, the calculated cost of the transactions dated on a date after that given previous date need to be adjusted, same as the calculated "Average" cost of the product.

This cost adjustment source type do not apply to products valued at "Standard" cost.

The "Standard" cost of a product remains as it was defined because the cost of a "Standard" valued product is always the same, regardless the date when a transaction of that product is booked.

In case of a product valued at "Average" costing algorithm:

Transactions that should have been booked in a previous date lead to the creation of "Backdated Transaction" cost adjustments.
A header and line(s) in the Cost Adjustment window are automatically created with the corresponding adjustments.

This adjustment type changes the "Unit Cost" of the product's transactions as well as the "Total Cost" and therefore the "Average" cost of the product.

Backdated transaction cost adjustments are created by:

Both ways, it is possible to enter a "Fix Backdated From" date which should not be part of a closed period.

Once Fix Backdated Transaction process is enabled in the corresponding costing rule, backdated transaction cost adjustments are automatically calculated by the Costing background process if applicable.


Backdated Adjustments Posting

A backdated cost adjustment can be post to the ledger in this window.

In our example above, the last receipt with movement date 02/01/2015 is the source of a backdated transaction cost adjustment that adjust the cost of the product sold from 105,00 €/unit to 102,50 €/unit

That adjustment can be post to the ledger. Posting will look as shown below:

Account Debit Credit
Product Asset Adjustment amount
Cost of Goods Sold Adjustment amount

Landed Cost

The source of this cost adjustment is booking additional costs that need to be distributed and therefore allocated as additional product costs.

Landed cost are cost such as shipping, insurance, customs charges and other costs needed to place the product in the organization's warehouse.

Landed cost adjustments change the calculated cost of receipt transactions by changing its "Total Cost", same way the "Average" cost of the product involved also changes.

The "Unit Cost" of the receipt transaction does not change as this type of adjustments is not a unit cost adjustment but an extra cost.

This cost adjustment source type do not apply to products valued at "Standard" cost, in the sense that:

For instance:

There is no need to run any specific background process or enable any preferences to get a "Landed Cost" cost adjustment.

"Landed Cost" cost adjustments are created after processing the corresponding landed cost document in the Landed Cost window, or after processing landed cost matching
A header and line(s) in the Cost Adjustment window of this cost adjustment type is automatically created with the corresponding adjustment.

As already mentioned, landed cost adjustment does not change the "Unit Cost" of product's transactions but its "Total Cost", same way as the "Average" cost of the product. This means that:


Landed Cost Adjustments Posting

Landed cost adjustments can be post to the ledger in the Landed Cost window, whenever those adjustments have been created for products included in a Goods Receipt transaction.

Moreover, landed cost adjustments can also be created for products included in a Goods Shipment transaction.

Manual Cost Correction

The source of this cost adjustment is a manual change of the cost of a specific product transaction.

This adjustment type only applies to product transactions valued at "Average" cost. It make not sense to manually change the cost of a transaction valued at "Standard" cost.

For instance:

There is no need to run any specific background process or enable any preference to get a "Manual Cost Correction" cost adjustment.

"Manual Cost Correction" cost adjustments are created after changing the cost of a product transaction in the Product window, "Transactions" tab, by using "Manual Cost Adjustment" process button.
A header and line(s) in the Cost Adjustment window of this cost adjustment type is automatically created with the corresponding adjustment.

This adjustment type changes the "Total Cost" of the product transaction, however product transaction "Unit Cost" can either be changed or not, depending on what the end-user wants to get.

There is a check-box named "Unit Cost" that it shown whenever "Incremental" check-box is selected:

For additional information please review Manual Cost Adjustment article.

Manual Cost Correction Adjustment Posting

This type of adjustment can be post to the ledger in this window.

In our example above, "movement from" transaction cost is changed (increased) manually by the end-user, therefore the cost of the "movement to" transaction needs also to be changed (increased).

That adjustment can be post to the ledger. Posting will look as shown below:

"Movement From" transaction adjustment:

Account Debit Credit
Warehouse Differences Adjustment amount of "Movement From" transaction
Product Asset Adjustment amount of "Movement To" transaction


"Movement To" transaction adjustment:

Account Debit Credit
Product Asset Adjustment amount of "Movement To" transaction
Warehouse Differences Adjustment amount of "Movement To" transaction

Negative Stock Correction

The source of this cost adjustment is booking a transaction, i.e a goods shipment, that turns the stock of a product into a negative quantity. This type of correction is only implemented for "Average" costing calculation.

At the time of booking a new receipt of that item, regardless if that receipt turns item stock to a positive/negative/zero value, a negative cost correction adjustment is created and related to that new receipt, to get that the stock remaining of that product is valued at the last purchase price, in the case of "Average" cost calculation.

For instance:

A negative stock correction cost adjustment will be created whenever an incoming transaction for the product such as a goods receipt is booked. That adjustment will be allocated to the goods receipt.

This adjustment type does not change the "Unit Cost" of the receipt but its "Total Cost" same way as the "Average" cost of the product involved. This means that:

There are two actions to take to get negative stock correction cost adjustments:

Negative Stock Correction Adjustment Posting

This type of adjustment can be post to the ledger in this window.

In our example above, an adjustment of this type is created whenever a new incoming transaction such as a goods receipt is booked for the product having a negative stock.

That adjustment can be post to the ledger. Posting will look as shown below in the case of a negative adjustment amount, otherwise in case of a positive adjustment amount:

Account Debit Credit
Warehouse Differences Adjustment amount
Product Asset Adjustment amount

Price Difference Correction

The source of this cost adjustment is a change in either the purchase price of an order or the purchase price of an invoice after receiving the goods.

Price Difference Correction is launched only for Transactions of Type Receipt. Other Transactions, such as Return Material our Outgoing Transactions are not taken into account, since they should not modify the Average Cost due to a Price Correction.

Those goods were received at a price that has changed, therefore the calculated cost of the receipt needs to be adjusted, same as the calculated "Average" cost of the product.
"Standard" cost would remain as it was set.

For instance:

Changes in purchase price leads to the creation of "Price Difference Correction" cost adjustments.
A header and line(s) in the Cost Adjustment window of this cost adjustment type is automatically created with the corresponding adjustment.

This adjustment type changes the "Unit Cost" and the "Total Cost" of the transactions, same as the "Average" cost of products.

"Price Difference" correction adjustments can be performed "automatically" or "manually":

As shown in the image below, this process allows to select the Organization for which this process needs to be run, enter a given movement date and select a product or set of products for which price difference correction cost adjustments would need to be create.

ProcessPriceDifferenceadjustment2.png

Additionally, the Costing Background Process can also create price difference correction cost adjustments, only if:

Price Difference Correction Adjustment Posting

This type of adjustment can be post to the ledger in this window.

In our example above, a change in the purchase order price (increase) implies that both the calculated cost of the "Goods Receipt" and the calculated cost of the "Goods Shipment" need to be adjusted same as the "Average" cost of the product.

That adjustment can be post to the ledger. Posting will look as shown below :

Goods Receipt adjustment

Account Debit Credit
Product Asset Goods Receipt Adjustment amount
Invoice Price Difference Goods Receipt Adjustment amount

Goods Shipment adjustment


Account Debit Credit
Cost of Goods Sold Goods Shipment Adjustment amount
Product Asset Goods Shipment Adjustment amount

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