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Thursday, September 19, 2013

Cost Adjustment (1 out of 4) Override Documents

When inventory items are either purchased, manufactured or sold through the associated modules accordingly; Purchase Order Processing, Manufacturing or Sales Order Processing, these items will be exposed to specifically four different scenarios in which cost variance documents are calculated. Each of these scenarios have its own characteristics and considerations.
Understanding these scenarios comes as an essential part of understanding these modules behaviors and their effects on the inventory module from one side, and the inventory versus General Ledger on the other side.
In this post, I will be shedding a light on the first scenario, which is the override documents.
Setup and Configuration
On the setup level of Dynamics Great Plains, Quantity Shortage option can be mainly setup in one of the following;
  • Inventory Control | Dynamics GP > Tools > Setup > Inventory > Inventory Control
Inventory Setup
Inventory Control – Override Setup
There are three basic options to check which will allow quantity shortage to be handled through override documents. Checking one of these options will allow the quantity on hand to drop to a “negative value” since the required quantity to be withdrawn is bigger than the available quantity

  • Sales Order Processing |  Dynamics GP > Tools > Setup > Sales > Sales Order Processing > Sales Document Setup > Fulfillment Order/ Invoice
This option will allow the sales of quantities less than the quantity available, which results with quantity shortage and override documents
SOP Setup
Sales Order Processing – Override Setup
Understanding Override Documents – Functional Point of View
Though this section, I will provide a practical example through which an adjustment override is allowed in Inventory to withdraw less than the quantity available resulting with negative quantity on hand.
IVAdjustmentOverride
Transaction Level – Quantity Shortage
  • Document Type: Adjustment Out
  • Item Number: Chair
  • Current Cost: 5
  • Quantity on Hand: 0
Adjustment Transaction
Account Debit Credit
Inventory 0 50
Inventory Offset 50 0
After the transaction is posted, the quantity on hand will be (-10).
Now, supposing that the after a while, an inventory replenishment occurs to relieve the override document. The replenishment is done through a receiving document (Shipment/Invoice) but with a higher unit cost (7).
The inventory replenishments will result not only with the receiving document, but with a cost adjustment document as well. The following journal entries will be posted;
Receiving Transaction
Account Debit Credit
Inventory 70 0
Inventory Offset 0 70
Cost Adjustment Document
Account Debit Credit
Inventory 0 20
Inventory Offset 20 0

Understanding Override Documents – Technical Point of View
Inventory tables responds to the override document in the best way to best fulfills data accuracy, by recording all the required fields. It’s worth saying that each of the inventory tables has its own behavior which are all working in consistency and harmony to provide several insights on the same piece of information
Section One | Quantity Shortage and Override Documents
IV10200
As for the purchase receipt layer work table, there is no available purchase layer from which to adjust out, therefore Dynamics GP throws an override purchase receipt layer with a zero quantity received and 10 quantity sold
IV10201
As for the purchase receipt layer details, a detail record for the adjustment out will be thrown and linked through the criteria
  • (IV10200.ReceiptSequenceNo = IV10201.SourceReceiptSequence No)
SEE30303
Most importantly, the historical inventory trial balance table, records most of the essential details since it will be later the only inventory table containing cost adjustment document
adjout table
Database View – Inventory Tables with Override Document

Section Two | Inventory Replenishment and Cost Adjustment
Now, to go with our scenario, a receiving transaction (Shipment/Invoice) for the same item is posted later on. Most importantly, with different cost. See below how tables are updated.
As for the Inventory Transaction Amount History (IV30300), no changes are performed on this table since the behavior of this table is to record historical transaction as is, and keep them in the same historical state regardless of any further changes
As for the Inventory Purchase Receipt Layer (IV10200), changes on the quantity received as long as the receipt sequence number (the link with IV10201)
As for the Inventory Purchase Receipt layer details, the original receipt sequence number is changed accordingly to be linked with the purchase receipt layer. On the other hand, the unit cost is replaced with the new cost while the old cost is recorded in ADJ cost field.
As for the HITB, a cost adjustment record is thrown with the cost adjustment journal that will be posted to General Ledger in order to adjust the previous layer unit cost. And keep Inventory versus GL tied together.
 
RCV Table view
Database View – Inventory Tables with Inventory Replenishment
Cost Adjustment – Case 1 out of 4 (Override)
To be Continued …

Best Regards,
Mahmoud M. AlSaadi

9 comments:

  1. Hi Mohmmod,

    Can I allow Override (/Inventory Control Setup) on the Quantity available without overpassing the Quantity on hand ? I beleive GP is a bit generalist on this Override feature.

    The context is when I use In-transit order and without picking the items, it reduce the quantity Available by the quantity orderd in Transit. I would like to allow my storemen to make Inventory Adjustment up to the quantity On Hand and not Quantity Available. I do not want the In-Transit Order to block the Quantity on Available before I pick it.

    Thanks,


    Patrick

    ReplyDelete
  2. Hi Mahmood

    Your blog is awesome wonderful

    I have the following problem
    He was received by sending a product with cost and incorrect unit
    Some data that may be of interest to understand the case . Our company is in the food and beverage industry operates as FIFO costing system , handling units and units purchase prescription. There is an option in the article master that allows the equivalence of units for unit conversions purchase recipe unit are made. (The cost is updated with the last record if a new invoice record with the correct unit cost and updates it with the latter)
    The case is as follows:
    This product is received
    Corn 10can $ 100
    real
    Corn 10Box $ 100
    In this case I have errors in both quantity and cost
    Transfers and assemblies which registered product costs were made in error .
    When the sale was also presented the altered cost.
    What is the best way to correct this case?

    Thanks

    ReplyDelete
    Replies
    1. Apologies, the case is not quite clear to me. Would you please provide further details ?

      Delete
  3. Hello Mr Mahmood

    Sorry for not being clear with the data sent.

    The product has the following caracteristics:
    Item Number Description U Of M Unit Cost QTY In Base U Of M Selling UB UB Cost Costo Std
    30211 Corn Can RD$190.08 64 Oz RD$2.97 RD$2.97
    30211 Corn Box RD$1,142.03 384 Oz RD$2.97 RD$2.97


    Receiving and Invoices Details
    Document Type Document Number Document Date TRX Location Transfer To Location Item Number Description U Of M TRX QTY Unit Cost Extended Cost QTY In Base U Of M Total Qty UB Selling UB UB Cost Costo Std
    2 RC0051316 15-may-15 BONA 30211 Corn Can 10 RD$1,142.03 RD$11,420.30 64 640 Oz RD$17.84 RD$2.97

    The order and receiving the product has an error . I was due to receive 10 boxes to RD$1,142.03 and not 10 Can to RD$1,142.03. This altered the unit cost. Can has box cost

    Transfer & Assembly
    Document Type Document Number Document Date TRX Location Transfer To Location Item Number Description U Of M TRX QTY Unit Cost Extended Cost QTY In Base U Of M Total Qty UB Selling UB UB Cost Costo Std
    3 TR000066651 15-may-15 BONA PROD 30211 Corn Can 2 RD$1,142.03 RD$2,284.06 64 128 Oz RD$17.84 RD$2.97
    7 ASM0000044883 15-may-15 PROD PROD 30211 Corn Can -2 RD$1,142.03 RD$(2,284.06) 64 -128 Oz RD$17.84 RD$2.97
    3 TR000066652 15-may-15 BONA AGMA 30211 Corn Can 3 RD$1,142.03 RD$3,426.09 64 192 Oz RD$17.84 RD$2.97

    The unit cost for the transfer & assembly is incorrect

    Sales
    Document Type Document Number Document Date TRX Location Transfer To Location Item Number Description U Of M TRX QTY Unit Cost Extended Cost QTY In Base U Of M Total Qty UB Selling UB UB Cost Costo Std
    6 051520151234 15-may-15 AGMA 30211 Corn Oz -64 RD$17.84 RD$(1,141.76) 1 -64 Oz RD$17.84 RD$2.97

    The unit cost for the sales is incorrect

    How I can correct the inventory & cost if the documents are posted.
    Thanks

    ReplyDelete
  4. Sorry again

    The information looks plain text. I Can't send like html or table

    ReplyDelete
  5. Thank you for your response as soon as possible

    ReplyDelete
  6. Hello Mr Alsaadi

    I have a problem with the cost of inventory transfer . GP registers a cost transfer is not for the cost of entry . Why does this happen ?, As I can correct it?
    In this example I record an assembly of a product costing GP $0.96 and I registered a record of transfer of inventory cost $117... Check the historical and could not find an entry document that originated this cost.
    Document Date Document Number TRXLOCATION TOLOCATION QTY Unit Unit Cost
    26/12/14 ASM0000042774 PROD 12,966.40 OZ 0.98
    TR000064025 BONA PASA 880 OZ 0.93
    TR000064027 BONA OPTI 6,848.00 OZ 0.93
    TR000064028 BONA MALE 11,744.00 OZ 0.93
    TR000064030 BONA BRAS 880 OZ 0.92
    TR000064031 BONA HIGU 2,176.00 OZ 0.92
    TR000064032 BONA PUCB 896 OZ 0.92
    TR000064034 BONA AGMA 3,584.00 OZ 110.78
    TR000064045 BONA JULU 1,328.00 OZ 117.57
    TR000064060 BONA TRATTO 2,864.00 OZ 117.57
    TR000064155 PROD BONA 11,546.88 OZ 0.98

    ReplyDelete
  7. Dear Mr Mahmood,

    On Inventory Transfer entry, does cost variance journal will have any impact. Could you please confirm?

    Regards,
    Ramanan

    ReplyDelete
    Replies
    1. Hello
      I really need further information in order to provide a precise answer. Would you please explain more ?


      Your feedback is highly appreciated
      Best Regards,
      Mahmoud M. AlSaadi

      Delete