How to reduce the Cost??

kish2007

Hi,
I was strucked in this scenario. we purchased 10 qty with Rs.10/- from Vendor A. after purchasing the 10 qty we distributed to 10 locations by using Transfer order. after that we sold 4 qty with Rs.20/-. So we are having 6 qty. now the item cost is reduced to Rs.5/-. we will not return the goods. we will give the credit note to the vendor.

First 4 sold qty will take unit cost as Rs.10/-
After reducing the unit cost,remaining 6 qty will take unit cost as Rs 4/-.

we tried the following way. we will pass one credit memo with 6 qty,unit cost as Rs.10/-
after that we pass one purchase order with 6 qty, unit cost as Rs.4 /-. If we follow this way next sales it takes cost amount actual is Rs. 4/- only. but the problem is the Item inventory is available in different locations.For example remaining 6 qty available in 6 different locations. in this case we have to pass 1 credit memo, in the lines i have to select same item with different locations and 1 purchase order,i have to select same item with different locations.

can you please let me know the easiest way. How to update the cost.


Regards,
kishore...

chengalasettyvsrao

kish2007 wrote:

we purchased 10 qty with Rs.10/- from Vendor A. after purchasing the 10 qty we distributed to 10 locations by using Transfer order. after that we sold 4 qty with Rs.20/-. So we are having 6 qty. now the item cost is reduced to Rs.5/-. we will not return the goods. we will give the credit note to the vendor.

Did u pass the Invoice for that items what u purchased ?

If you are passing the Credit memo what is the Type In the Purchase credit memo line ?

kish2007 wrote:

can you please let me know the easiest way. How to update the cost.

use the Revaluation Journal to reduce/ Increase the cost . sytem will allow the to Revluate the Cost for Invoiced Quantities only.

kknav

Hi,
Thanks for ur reply. when i do the revaluation journal it will applied to the total 10 qty. but in my scenario it is applicable only the remaining qty.Cost of Goods Account will post the following way.

Type qty cost/Price Total
1. Purchase 10 10 100
2. sale 4 20 80

when i run the batch jobs(adjust cost item entries and Post Inventory cost to GL) then the COGS Account value is Rs.40.

now the cost is reduced to Rs.5/-
but when i use revaluation journal the COGS Account value is 20 (40-20).
it will not reduce the COGS Amount.

3. sale 2 20 40
when i run the batch jobs again then it will show the COGS account value is 50(40 + 10).

Is it possible.

Regards,
Kishore...

chengalasettyvsrao

kknav wrote:

when i do the revaluation journal it will applied to the total 10 qty. .

if you want to revalue inventory for 6 PCS, then why did u revalue for 10 pcs against that item ?

so if you reduced the cost 5 /- for 10 pcs ,then system is doing right .