Purchase order receipts post to the PO Variance Adjustment account under several conditions. Review each scenario to identify the cause.

Standard cost differences

• The system posts to the variance account when an item uses standard cost.
• This occurs when the receipt cost differs from the defined standard cost.
• Inventory stays valued at the standard cost.
• The system posts the difference to the purchase variance account.

Average cost with negative quantity

• The system creates a PZ transaction when inventory goes negative.
• This happens when you update a Receipt of Goods or Receipt of Invoice.

To confirm this:

• Run the Inventory Detail Transaction Report.
• Use the date range 01/01/1900 through 12/31/9999.
• Locate the PZ transaction in the report.
• Identify another transaction above it with a similar amount.
• Review the source, such as SI, BI, or SO.

TIP:

Prevent this issue by maintaining a positive on-hand inventory for average cost items.

 

Receipt of goods versus receipt of invoice differences

• The system posts to the variance account when costs differ between receipts.
• Inventory uses the Receipt of Goods cost for valuation.
• The system clears the Purchase Clearing account during invoicing.
• The cost difference posts to the PO Variance Adjustment account.

Multiple partial receipts with varying costs

• Variance occurs when partial receipts use different unit costs.
• The system averages the extended costs across all receipts.
• It calculates a new unit cost for the purchase order.
• The difference between actual and calculated costs posts to the variance account.

NOTE:

Product Line Maintenance defines the PO Variance Adjustment account.