Order Price Quantity Variance

Order Price Quantity Variance

Definition

The unit in which a material is priced in a purchase order is called the order price unit.

You order 100 pieces of a material at $20 per kg. In this case, "piece" is the order unit, and "kg" (kilogram) is the order price unit (OPUn). With this type of purchase order, the ratio between piece and kilogram must also be entered so that the system can convert quantities of one unit of measure into the other, for example four pieces equal 10 kg.

A variance in order price quantity occurs in the following cases:

The invoice is received after the goods receipt

The ratio (invoiced quantity in OPUn) : (invoiced quantity in order units) differs from the ratio
(quantity of goods received in OPUn) : (quantity of goods received in order units).

Invoice receipt before goods receipt

The ratio (invoiced quantity in OPUn) : (invoiced quantity in order units) differs from the ratio (quantity ordered in OPUn) : (quantity ordered in order units).

See also:

Posting Order Price Quantity Variances