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Purchase price variance / cost tier adjustmentby
I am trying to figure out how to manage cost tier adjustments, also known as purchase price variance.
Purchase order created for 10 widgets valued at $10 per widget.
10 widgets are received. At this time the value of my inventory goes up by $100.
A week later we received the invoice and see that the widgets were only $9 each
Before I validate the invoice I would like to change the cost to $9 per widget bringing my invoice total down to $90.
Once I validate the invoice I need the inventory value to be adjusted from $100, down to $90 I also need to make the adjustment on record in my purchase variance account.
Basically I need to create a journal entry to the inventory account if there is a price variance between the original purchase order and the invoice price.
I believe this is a fairly common task.
Would this be handled with a return?
John Pia Jr