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Sales Shipment Cost Adjustments

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Posted on by NZCraig

Could someone please help me explain the adjustment entries in the following screenshot. Why do most shipments NOT require adjustments (i.e. the Cost Amount (Expected) and Cost per Unit are populated immediately and do not require the adjustment to do this), but some do? It appears the adj. cost process is running immediately after the shipment is posted and is creating the adjustment line - that's fine. But why?

These items are costed using Standard costing. Therefore I would have thought the Cost per Unit would simply default from the item card, or am I oversimplifying things?

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Hello,

A few setups to review: On the Inventory Setup page, do you have Expected Cost = TRUE. If so, your accrual entries will be posted when you Post Receive or Post Shipment are transacted. Now let's breakdown the entries, in a Standard Cost Method company (image below). The Expected entry in your pic seems reasonable if you just performed Post Shipment. After you invoice, that entry will reverse and the Actual will be posted, as shown in my posting process flow below.

Hope this helps.

Thanks,

Steve

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NZCraig 30 on at

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Thanks Steve. I appreciate the response, and I can confirm that expected costs is turned on.

What I'm struggling more with is why some entries require adjustment, and many more do not. In the attached screenshot you can see that one (out of many) shipment entries for this item has required an adjustment.

As it happens this one shipment line was on a shipment which had three lines. All three shipment lines required an adjustment like this one. As a result the statistics show a pre-adjustment profit of 100% and an adjusted profit of 51.7%.

Which is fine. I just want to understand why the adjustment would have been necessary in the first place when all the other entries for this item have not required an adjustment...

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Hello,

Without tracing the Item layer that was shipped to see if that Purchase Receipt was Invoiced as well, I can only answer your question this way:

1. I see the Expected Cost entry for -1039.80, which is the Expected Cost of the Shipment based on the Standard Cost.

2. I do not see any Actual amounts in your pic so wondering when you Posted Invoice and if you ran the Adjust Cost/Item Entries process?

If you want to do this over Teams, I can be available if you want to review. My email is steven.chinsky@wipfli.com.

Thanks,

Steve

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