• From: Nigeria
  • Registered: 09/08/2007
  • Posts: 124

Topic: How to effect new purchase price when there is a change from vendor

Hello Joe,

You are doing a great job. I really appreciate your effort.

I have a very serious problem with FA. When we started using it in May 2010, I entered all the product we sell and their purchase and sales prices. After about a month, one of our vendors reduced the prices of their products which inverably means that there will be a reduction in the purchase price we entered previously and also the sales prices of their products. So what I did was to go to Item and Inventory then purchase price and change the affected product and also go to the sales price and change the price of the affected products.

This happened about 2 occasions.
last saturday, we tried to look into the profit that the business has made. when  i printed the report, I discovered that from may till date, all the price it used to calculate the profit of the business is the présent price I entered two weeks ago. what do I do.

Also when I looked at the invoice, it has the exacted prices with which we used to sell at as that time but when I go to Inventory Sales Report to print all the report to date, I get a report where the purchase price used for all the calculation is same as the latest purchase price i inputed.

Please help me.

Popsicles12.

  • joe
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  • Registered: 03/15/2007
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Re: How to effect new purchase price when there is a change from vendor

If you refer to the report, Inventory Sales Report, the price column is the actual price per the transaction date eventually changed to domestic currency. The cost column is the overall average material cost.

I need more information, a concrete example, so I can follow your operations.

/Joe

  • From: Nigeria
  • Registered: 09/08/2007
  • Posts: 124

Re: How to effect new purchase price when there is a change from vendor

Hello Joe,

thanks for your prompt response.

Let me explain. This is the scenario. I bought a product for N50 each in may. In june my suppliers reduced the price to N43. In July the price further went down to N40. and September the price went to N48 per each product. As these prices were changing, I was changing the purchase price and sales price under inventory, so that the COGS can be calculated as sales are made. At the end of september, I decided to check the Inventory sales report from May to September and I discovered that under cost for this product, it was showing N48 from May till september.
My question is this?
How am I supposed to change the purchase price in FA when there is change in it?
How do I correct this as it is giving me false report?.

Thanks for your support

Popsicles12

  • joe
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Re: How to effect new purchase price when there is a change from vendor

Hello again,

You don't have to change the purchase data every time it changes. Just enter the new price in the purchase order line. When the items are received, the purchase price, description and UOM (can be changed here as well) are updated automatically and will be suggested the next time you enter the item for the next PO. Even if the prices changes when entering the Supplier Invoice, it will be changed automatically in purchase price data.
The average material cost is updated also both during PO receive and (if changes in invoice) during supplier Invoice.

As a last resort, if you see something is not correct, you can change the average material cost under Items and Inventory, Standard Costs.

/Joe

  • From: Nigeria
  • Registered: 09/08/2007
  • Posts: 124

Re: How to effect new purchase price when there is a change from vendor

Hello Joe,

Thanks for the solution. I quite appreciate.

How do I now effect the solution to be effected for already entered invoices? Do I change the standard cost manually, or it there another way to it?

Thanks in advance.

Popsicles.

  • joe
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Re: How to effect new purchase price when there is a change from vendor

Hello,

You can change the average standard cost in Itens and Inventory to what you want it to be, lower right. This operation will, however, create a difference record in GL.

/Joe

  • From: Nigeria
  • Registered: 09/08/2007
  • Posts: 124

Re: How to effect new purchase price when there is a change from vendor

Hello Joe,

thanks for always being there.
I still have a problem. I have updated the the average cost and I got the figure. But the challenge now is that every month, we pay the sales reps a certain amount of commission if they exceed a certain amount  of sales. Presently we have a five months report (May - September). When we decided to use FA to check the profit made for June, it was too high because, as at that time the sales price was high compared to the average. presently, the sales price is about N20 less than what is it was going for as at June.
What do I do seeing that the business calculates the commission based on FIFO. How do I still get the exact commission for the reps so that nobody is cheating the other.

Since the purchase price is changing the sales price is also changing. How do I alter the sales price?

expecting your response,

thanks

Popsicles12.

  • joe
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Re: How to effect new purchase price when there is a change from vendor

Hello Popsicles12,
I have been following your topic carefully and I see that we in the stock_moves table stamps the average standard cost at the time being recorded. There are no stamping for Work Orders. So I would suggest changing the algorithm in Inventory Sales Report to use this field instead of the overall average standard cost if the field is non zero.
This will go into 2.3 release, but you can change the following row in /reporting/rep304.php, line 46 into:

            

SUM(-IF(".TB_PREF."stock_moves.standard_cost <> 0, ".TB_PREF."stock_moves.qty * ".TB_PREF."stock_moves.standard_cost, ".TB_PREF."stock_moves.qty *(".TB_PREF."stock_master.material_cost + ".TB_PREF."stock_master.labour_cost + ".TB_PREF."stock_master.overhead_cost))) AS cost

/Joe

  • From: Nigeria
  • Registered: 09/08/2007
  • Posts: 124

Re: How to effect new purchase price when there is a change from vendor

hello Joe,

I really appreciate your response. Thanks a lot. May I say that we do not manufacture. We buy and sell. What I mean now is that purchase price have changed for about six times and within those period i have been changing the purchase prices. Now that you have enlighten me on what to do, I want to know the following:

1. What will be the purchase price figure now? is it just any of the price or the very first opening purchase price? since I have manually computed the average price.

2. We do a monthly check on profit so that we can give a percentage of the profit to the sales rep. How do I get the accurate report of the each month's profit. Does FA only calculate the average based on that month in question of do it use the overall average?

thanks for your prompt response

popsicles12.

  • joe
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Re: How to effect new purchase price when there is a change from vendor

The avg. standard_cost is stamped into the stock_moves table when delivering the items (either during delivery or direct invoice). This stamp is based on the average material cost on the delivery day for the item. So this value will also be the value that is stamped into the GL transactions when creating the delivery (direct invoice).
So with the changes done now, we should always ensure the correct values in both GL and Inventory Sales Report for the same period.

/Joe