Mark,
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I agree with the scenario of materials purchased (and directly issued upon receipt) to a Job.
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I don't buy the other stuff. In 28 years (in several quite different manufacturing scenarios), I've never seen a case where stock materials (for which there may be a PO to invoice variance) are received BEFORE invoices arrive.
Â
Typically invoices are faxed/mailed and arrive hours (even days for global source sea shipments or even LTL shipments) before the actual material arrives. Unless it is a 'mom and pop' operation where invoices might be entered and processed in an untimely manner (once per week say), the actual invoice price is available within hours of inspection pass and receipt to stock.
I've never seen or used a system that didn't have a process for basing cost on actual invoice price when doing LIFO or average costing. They typically have a method of temporarily using PO cost and then doing an update after an invoice is posted.
A mechanism similar to what Vantage does when it goes to the trouble to posting any PO to Invoice cost difference to a variance account could just as easily adjust the intial cost entry and trigger a recalc of average cost.
(This is not so different from internally manufactured parts - where you can use Job Adjustment to clean things up before it hits your inventory account.)
The only variances would then be for that newly received material that may already have been consumed in WIP (or via direct sale and shipment).
They kinda took the easy way out treating every mismatch (material cost and labor) as a variance.
It never ceases to amaze me as to how, as the use of newer 'better' technology platforms are increasing the selling drivers of big packages like Vantage - basic functionality common (and correct) in old character based products of years gone by is lost.
Rob BrownÂ
Â
I agree with the scenario of materials purchased (and directly issued upon receipt) to a Job.
Â
I don't buy the other stuff. In 28 years (in several quite different manufacturing scenarios), I've never seen a case where stock materials (for which there may be a PO to invoice variance) are received BEFORE invoices arrive.
Â
Typically invoices are faxed/mailed and arrive hours (even days for global source sea shipments or even LTL shipments) before the actual material arrives. Unless it is a 'mom and pop' operation where invoices might be entered and processed in an untimely manner (once per week say), the actual invoice price is available within hours of inspection pass and receipt to stock.
I've never seen or used a system that didn't have a process for basing cost on actual invoice price when doing LIFO or average costing. They typically have a method of temporarily using PO cost and then doing an update after an invoice is posted.
A mechanism similar to what Vantage does when it goes to the trouble to posting any PO to Invoice cost difference to a variance account could just as easily adjust the intial cost entry and trigger a recalc of average cost.
(This is not so different from internally manufactured parts - where you can use Job Adjustment to clean things up before it hits your inventory account.)
The only variances would then be for that newly received material that may already have been consumed in WIP (or via direct sale and shipment).
They kinda took the easy way out treating every mismatch (material cost and labor) as a variance.
It never ceases to amaze me as to how, as the use of newer 'better' technology platforms are increasing the selling drivers of big packages like Vantage - basic functionality common (and correct) in old character based products of years gone by is lost.
Rob BrownÂ
--- On Tue, 5/27/08, Mark Wonsil <mark_wonsil@...> wrote:
From: Mark Wonsil <mark_wonsil@...>
Subject: RE: [Vantage] Vantage 8.00 - Updating average cost based on actual invoice cost
To: vantage@yahoogroups.com
Date: Tuesday, May 27, 2008, 1:49 PM
> You are correct, this is a flaw of Vantage. In 8.03, when a PO is
> received at a price and that price changes with the invoice, when the PO
> is changed it will still show AP to pay the previous price. I agree
> that in the perfect world this would be ideal, but this is not a perfect
> world.
Let me be devil's advocate for a second. Unless you're buying materials
directly to a job, average or actual costing systems will always have timing
issues. Let's say that you purchase material and a week later the invoice
comes in at a different amount. If that material was not issued, you could
recalculate the average cost and everybody is happy. But it's not a perfect
world and chances are slim that at least some of the material hasn't been used
yet. The two general cases are:
1.) The material gets issued to multiple jobs before the invoice comes in? How
do you calculate the average cost? How much gets allocated to the jobs that
received those parts? And what if that job sent its completed parts to
inventory (also average cost) which have been issues to yet another job or
shipped out on an order? Do you expect the software to backtrack and re-cost
everything after the invoice arrives?
2.) Material is returned/salvaged between the time of the PO receipt and the
invoice. How do you cost that material and what do you do to it when you apply
the adjustment from the invoice?
This is not just an issue with Vantage. I have never had any sales person or
consultant from any software company ever explain to me how to handle these
timing issues in average or actual cost systems. If someone does know the
answer, I am all ears.
Mark W.