I have an issue that I can not seem to resolve.

We just started using the Adagio OE to enter orders. My problem was that since these orders were entered and then invoiced in ACCPAC we have a Cost Variance that is wayyyy out of whack.

We use standard costing and our standard cost for the item was 5.20 and the most recent cost was 5.20. We posted 2300 and got a cost variance 27,496,040.00.

77021- LA 2,300 4026 16,100.00 *
11,960.00
5210 27,496,040.00
PLANTER BUCKET ST 2 LAVENDER EMBOS 1205 27,508,000.00

Can anyone help explain how this could happen.

mp

Hello Mauricio,

The first question is - who did Dayend, Adagio or ACCPAC? (Also what versions and service packs etc.)

The cost variance account is hit with the difference between the standard cost and average cost for an item when dayend is run. Next is - who touched the average cost? This figure is affected by receipt of goods (Inventory or Purchase Orders) and adjustments (or less likely by a credit note in OrderEntry returning goods to inventory). What is the average cost for this item? When did it change? (Print some of the inventory history reports to see what's been going on with the item.)

The Dayend was done in Adagio. I know the orders were entered in Adagio but were invoiced in ACCPAC.
The average cost for the item is : 5.20
and the standard cost: 5.20


Adagio Inventory 8.0b(061010)
Adagio Order Entry 8.0A (060510)

This particular item was an item that we have only three transactions on and here they are:
07/01/31 10473 77021- OE KIR -2,300 23,000.00 5532 11,960.00
Shipment PLANTER BUCKET ST 2 LAVENDER LA EA 5210 1205 -11,960. 0.00

07/02/21 60 77021- IC FG 2,300 2020 -11,960.00
Receipt PLANTER BUCKET ST 2 LAVENDER LA EA 1205 11,960.00

07/03/15 10561 77021- OE FG -2,300 16,100.00 5005 11,960.00
TRKIRK Shipment PLANTER BUCKET ST 2 LAVENDER LA EA 5210 1205 27,496,0 -27,508,000.

39,100.00 11,960.00 -27,484, -27,496,040.
* Note: Extended may be AP Clearing, Adjustment WriteOff, Cost of Sale, J/C Clearing or Assembly Cost amount.
3 transaction(s) printed.

Hi Mauricio,

The first shipment predates any receipt, so it's average cost would be $0.00. Then you received some into inventory (which will calculate an average cost). Then you shipped some more. Is that right?

It's hard to read the transactions because of wrapping and alignment. Try using the {code} {/code} tags to keep the spacing as you type the numbers. You replace the "{" with "[" brackets to use the special tags.

You are correct that the average cost would have been 0.00 when we first shipped. We then received the exact amount that we had originally shipped.

Later we shipped the same amount and for some reason the costing was overstated. As you can see by the reciept it was received at the correct cost. 11,960/2300 = 5.20 and our standard cost is 5.20.

btw I now have another invoice that did the same thing. This invoice was entered into ACCPAC, invoiced in ACCPAC and Day end ran in ACCPAC. I have never seen this happen before.

Mauricio

Hi Mauricio,

The simple answer is - Don't let inventory go negative. There's an option in the company profile to prevent this.

I think the average cost amount would have been messed up when you posted the receipt, since you'd then have 0 on hand with a cost of 11,960.

You then ship 2300 at what I think would work out to infinite cost. Someone more familiar with what's going on in this case will probably correct me.

Andrew,
I have been at this company for 8 years and we ALWAYS have let items go to negative. We have never seen this problem.

btw the other instance that I reported we found was correct. The average cost was at 120 and standard at 0 so in essence we created that problem.

The instance originally reported can not be explained. Other than we used Adagio.

We are tracking our costing now when it hits the GL so we can reverse the erroneous entries. I will keep you abreast of my progress uncovering the problem.

mp

Hi Mauricio,

I think you'll find that Adagio Inventory and OrderEntry doesn't have anything to do with this. One of the invoices you mention was processed completely in ACCPAC.

Are you using Purchase Orders for Adagio?

Andrew,
The one that was completely in ACCPAC was correct. Our average cost was 120 and our standard cost was 0.

We have PO installed but are not using it.

mp

Hi Mauricio,

Did the one done completely in ACCPAC follow the same pattern? (Sold before any receipt, then receipted, then more sold?)

yes it does but as I stated it was correct, there was a large cost variance.

mp

Hi Mauricio,

I tried a test with Adagio Inventory (80B-2006.11.02) and Adagio OrderEntry (80A-2006.08.25) where I created an item that uses Standard Costing method and both Most Recent Cost and Standard Cost as 5.20. Base Price is 10.00 and made sure that the item is allowed at all locations.

I started by creating an order/invoice for qty 2300 in OrderEntry and posted and ran Day End. I then created a receipt in IC for the same location and qty 2300. At this point, all quantities and costs were 0.00 when inquiring on this item. I then created and posted and Day Ended a 2nd order/invoice for the same item and qty 2300. OE Day End did not calculate any cost variance as expected because the Most Recent Cost and Standard Cost were both still equal at 5.20. The amounts updating the IC Control Account and Cost of Sale account were both the same as well.

So I was unable to re-create the problem you reported with the versions of IC and OE I mentioned (which happen to be both one release after what you are using). Assuming that the costs you posted are coming from the IC Transaction history report, this means that you have printed and purged the Invoice Audit List report in OE - so we can't check there to see what information is recorded there. If you have a printed hard-copy of the OE Invoice Audit List, perhaps check to see what cost values are there.
------
You mentioned at the beginning that you entered orders with Adagio OE but invoiced with Accpac Plus OE. How do you do Day End Processing? This is key as Day End is what determines the costs for IC items.
-----
On your posted information, I see that the Cost of Goods GL account was different. Did you change this information (either the item's Category code, or the GL account on the Category code) between the Day Ending of the first and second OE invoice? It was account 5532 and now it is 5005.

Also, the amount going to your Inventory Control GL account 1205 is significantly different (27,496,000) than what it was the first time (-11,960.00). I think this is the key to determining the issue, rather than this being a Cost Variance problem (which is likely correctly calculating a difference but just between two values that shouldn't be different).

It is Day End in OrderEntry that is determining the costs. Wherever you are doing Day End (either with Adagio or Accpac Plus) then I believe this is the cause of the problem.

Hi,
Purchase Orders for Adagio updates the defined cost fields being possibly most recent cost, or standard, or Cost 1 or Cost2, at the time of creating a Purchase Order, if the recent cost was zero at the time of creating a PO. We do this to ensure that any items being shipped prior to receipting or being processed by End of Day processing in OE, have proper costs inside of Order Entry, General Ledger, and Sales Analysis. This also ensures proper costing for new items added to inventory.

By updating the recent cost at the time of creating a PO, gives you the flexibility to process sales orders in any time sequence you desire. A significant improvement over ACCPAC Plus.

Is there a reason why POA is installed but not being used?

Brian