ManualDoc:W1688A758BDA04C88A5C1D370EB979C53

Once the cost of a "Product Transaction" has been calculated by the costing background process and according to what is configured for the product(s) in the corresponding Costing Rule, it cannot be recalculated or deleted.
However and under some circumstances the calculated cost of a product transaction would need to be adjusted, for instance the purchase price of a purchase transaction changes after receiving the product.
If that is the case the calculated cost of the receipt would need to be adjusted to the new purchase price.

Cost Adjustments feature is in charge of managing adjustments created on already calculated transaction's cost.

It is important to remark that this feature takes into account the "costing algorithm" used to calculate costs, therefore it behaves differently depending on:

• If the costing algorithm used is "Average", the cost of a transaction changes and as a consequence of that the cost of the product involved changes.
  In that case, a cost adjustment transaction is created in this window to reflect that change, cost adjustment transaction that can be post to the ledger so the inventory value of the product is the same as its accounting value.

• However, if the costing algorithm used is "Standard", the cost of a transaction cannot change and be adjusted, same way the "Standard" cost of the product involved remains the same.
  In that case, no cost adjustment transaction will be created in this window.

As a consequence of the above "Cost Adjustment" window manage cost adjustments created for products and therefore products transactions valued at "Average" cost algorithm.

There are different types of "cost adjustments sources" which lead to get the correct "average" cost of a product.
For instance, receipt transactions that were not booked in the same order than happened or receipt transactions that require to add landed costs to its already calculated cost, all of that will impact and therefore require that the "average" cost of the product changes.

It is important to remark that:

• cost adjustments are cumulative, therefore a product transaction can have more than one adjustment of any type if required to get that the average cost of that product transaction is the correct one.

• there are two types of transactions:
  • those transactions whose costs need to be adjusted as "source" of the adjustment, i.e a goods receipt whose cost needs to be adjusted due to a change of the purchase price
  • those transactions whose costs need to be adjusted "not as source" but because of adjusting source ones, i.e a goods shipment whose cost needs to be adjusted because the corresponding goods receipt cost changed.

Above implies that for instance a "Price Difference Correction" cost adjustment header can have two adjustment lines, one set as "Is Source" = Yes and the other one set as "Is Source" = No.

• beside that, there are two types of adjustments:
  • those set as "Unit Cost" = "Yes", which means that the adjustment is going to change the "Unit Cost" of the transaction being adjusted besides its "Total Cost".
    That is the case of adjustments such as "Price Difference Correction", Backdated Transactions" and "Manual Cost Correction" set as "unit cost", as those ones change the "basic" cost of a transaction.
  • those set as "Unit Cost" = "No", which means that the adjustment is not going to change the "Unit Cost" of the transaction being adjusted but just its "Total Cost".
    That is the case of "extra" costs such as "Landed Cost", or adjustments done to manage the cost under "Negative Stock" scenarios or "Manual Cost Correction" do not set as "unit cost", but as an "extra" cost.

Let us imagine an scenario when there is only one receipt transaction of 1 unit of a product, valued at 10.00 €/unit. In that case receipt costs are the ones below, which can be reviewed in the "Product" window, Transactions tab:

• Trx Orginal Cost: 10.00
• Total Cost : 10.00
• Unit Cost : 10.00

A manual cost correction set as "Unit Cost" = "Yes" is booked for the receipt for an amount of 2.00 €. That correction creates a cost adjustment that changes the cost of the receipt as shown below:

• Trx Orginal Cost: 10.00
• Total Cost : 12.00 (10.00 + 2.00)
• Unit Cost : 12.00 (10.00 + 2.00)

New average Cost of the product = Total Cost / Stock = 12.00 € / 1 unit = 12.00 €/unit

After that purchase price changes from 10.00 €/unit to 12.00 €/unit.
That change in the price is a unit cost adjustment, which creates a 0.00 € adjustment because the unit cost of the transaction is already 12.00.
This implies no change in the average cost of the product, it remains as 12.00 €/unit

However, let us imagine now that the manual cost correction booked for the receipt for an amount of 2.00 € was set as "Unit Cost" = No, that is an extra cost which needs also to be taken into account. That correction changes the cost of the receipt as shown below, unit cost does not change:

• Trx Orginal Cost: 10.00
• Total Cost : 12.00 (10.00 + 2.00)
• Unit Cost : 10.00

After that, purchase price changes from 10.00 €/unit to 12.00 €/unit.
That change in the price creates a cost adjustment in the receipt of 2.00 = 12.00 - 10.00 €, therefore calculated costs of the receipt change:

• Trx Orginal Cost: 10.00
• Total Cost : 14.00 (12.00 + 2.00)
• Unit Cost : 12.00 (10.00 + 2.00)

Now this new scenario, implies a change in the average cost to 14.00 €/unit, this new average cost includes an extra cost of 2.00 €/unit.

As briefly mentioned above, Openbravo supports different sources of cost adjustments with the aim of covering different live scenarios. Those different types of cost adjustments sources are explained in the next section.