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Review Adempiere Standard Costing

Posted by: Bayu Cahya P on: November 27, 2008

I am studying Adempiere standard costing, and needed your view concerning with Adempiere accounting facts generated especially for purchasing, receiving and invoicing this goods. As per our understanding, standard cost will be correlated with purchase price variance. Here, we are using http://www.accountingcoach.com/online-accounting-course/30Xpg01.html for our Standard Costing reference.

We will take a look about accounting generated facts with samples provided by accounting coach as follows

  1. First Condition (Normal transaction)
    Denim standard cost $2.9 per square yard. Purchase price $2.9 per square yards. We buy for 1000 yards and Invoicing with $2.9 per square yards

    This is general journal format for this condition (no more and no less)

    journal-standard

    This is complete results while performing, Material Receipt, Invoicing, Match PO-Receipt and Match Invoice-Receipt with Adempiere.

    adempiere-standard-cost-journal

    Although there are no purchase price variance, Adempiere generates variance. This calculation comes from Doc_MatchPO lines 204 [a result from poCost.subtract(costs)]. In a human words, this values rose from (Purchase Cost for each Qty substract with Total cost). From mathematical side, this is the equation 2,897.1 = 2.9 – (1000 * 2.9)

  2. Second condition (Purchase price less than Standard Cost)
    Denim standard cost $3 per square yard. Purchase price $2.9 per square yards. We buy for 1000 yards and Invoicing with $2.9 per square yards

    This is general journal format for this condition (no more and no less)

    journal-standard2

    This is complete results while performing, Material Receipt, Invoicing, Match PO-Receipt and Match Invoice-Receipt with Adempiere

    adempiere-standard-cost-journal2

    As identified at previous condition, purchase price variance, came from this equation 2,997.1 = 2.9 – (1,000 * 3). While invoice price variance taken from debit source balance transaction substract with credit source balance transaction, ie 100 = 3,000 – 2,900

Uhm, I thought, this results was completely unacceptable.

“Shall we have a music right now?”

“Yes, play our favourite music, please”

Listening this kind of music should make us relax. While our brain relax, they should work effectively.

“Are you sure?”, said our teammates

“Try yourself. And hope we could have dancing session and matching our brains :)

We are starting our analysis with Doc_InOut, Doc_MatchPO and Doc_MatchInv. Struggle with this issues and the habit of Adempiere accounting debug which reside on server side codes, and this is really really challenging activity.

Okay, we have made some modifications and finally this is our test results

  • First condition
    Denim standard cost $2.9 per square yard. Purchase price $2.9 per square yards. We buy for 1000 yards and Invoicing with $2.9 per square yards. Take a look our journal created with white lines

    adempiere-standard-cost-journal3

  • Second condition
    Denim standard cost $3 per square yard. Purchase price $2.9 per square yards. We buy for 1000 yards and Invoicing with $2.9 per square yards. Take a look our journal created with white lines

    adempiere-standard-cost-journal4

  • Third condition
    Denim standard cost $2.9 per square yard. Purchase price $2.9 per square yards. We buy for 1000 yards and Invoicing with $3 per square yards. See our white lines

  • adempiere-standard-cost-journal5

  • Fourth condition
    Denim standard cost $3 per square yard. Purchase price $2.9 per square yards. We buy for 1000 yards and Invoicing with $3 per square yards. See our white lines

    adempiere-standard-cost-journal6

  • Fifth condition
    Denim standard cost $3 per square yard. Purchase price $2.9 per square yards. We buy for 1000 yards and Invoicing twice with $3 per square yards, first line with 600 qty and second line with 400 qty. See our white lines

    adempiere-standard-cost-journal7

“Seems good. But I have got [Resubmit - No Purchase Order link for Denim] exception while trying to post Material Receipt document”

“I’ll explain you. This is the idea, while Adempiere tries to valuation our material, we have to know in which currency this material would be valued. Because of this requirement, we have to make sure that our Material Receipt already connected with our Purchase Order”

“Is it means that while we have purchase order with IDR currency and USD as our accounting schema currency, the transaction will be book to IDR as source amount and USD as accounted amount?”

“Exactly. I will show you some example of this scenario”

  • Sixth condition (like fifth condition, but with multi currency transaction)
    Denim standard cost $3 per square yard. Purchase price IDR 29,000 per square yards. We buy for 1000 yards and Invoicing twice with IDR 30,000 per square yards, first line with 600 qty and second line with 400 qty. (Assumption US$ 1 = IDR 10,000). Let us see our white lines

    adempiere-standard-cost-journal8

“With all of this modifications, could I see your source code changes?”

“It’s ok. You can see our patch files in here, here and here

And now, we need our Adempiere community to evaluate and listening to their feeback. We will integrate to branch/stable while there are no argument against our works.

3 Responses to "Review Adempiere Standard Costing"

1 | Bayu Cahya P

December 2nd, 2008 at 11:07 am

Hi all,

We have a good discussion here https://sourceforge.net/forum/message.php?msg_id=5722029 which explaining about Adempiere standard costing implementation. Take a look.

regards
Bayu

2 | bob

January 3rd, 2009 at 11:59 pm

ONdImp hi nice site thx http://peace.com

3 | Redhuan D. Oon

April 13th, 2011 at 11:30 am

Bayu,
I am now studying this and making Fitnesse tests to prove it. Would it be useful to get this committed to ADempiere?

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