Example 1
With the material price analysis, you can interpret how price and exchange rate differences arise under the category Receipts.
1 Initial inventory
In Period 1, there is a beginning inventory of 10kg of the raw material cocoa in the warehouse that is valuated with the standard price of 20 Mexican pesos (Mxn).
2 Goods Receipt
In the same period, a purchase order is placed for 20kg of cocoa in the foreign currency US dollars (USD).
The goods receipt of 20 kg of cocoa takes place at a price of 2.1 USD with an exchange rate of 1USD: 10 Mxn. 20 kg of cocoa costs 42 USD or 420 Mxn. 400 Mxn are posted to the material stock account and 20 Mxn to the price difference account.
3 Invoice Receipt
At invoice receipt
a kilogram of cocoa costs 2.2 USD.The increase in the price of cocoa causes price differences to arise, and fluctuations in the exchange rate (at invoice receipt 1USD is 11 Mxn) cause exchange rate differences to arise. At invoice receipt 20 kg of cocoa costs 44 USD or 484 Mxn. At invoice receipt 22 Mxn are posted to the price difference account and 42 Mxn are posted to the exchange rate difference account.
In the material price analysis, the following values are displayed for Period 1.
Quantity |
Preliminary valuation |
Price differences |
Exchange rate differences |
Price | |
1 Initial inventory |
10 kg |
200 Mxn |
0 |
0 |
20 Mxn |
Receipts 3 Invoice receipt |
20 kg |
400 Mxn |
42 Mxn |
42 Mxn |
24.2 Mxn |
Other inward/outward movements |
0 |
0 |
0 |
0 |
0 |
Cumulated inventory |
30 kg |
600 Mxn |
42 Mxn |
42 Mxn |
22.8 Mxn |
Consumption |
0 |
0 |
0 |
0 |
0 |
Ending inventory |
30 kg |
600 Mxn |
*The price is calculated as follows:
(Preliminary valuation + price differences + exchange rate differences)/ quantity = price
See also:
Displaying Material Price AnalysisPostings:
Postings are made to the following accounts:
No. |
Periods |
Inventory |
Price differences |
Exchange rate differences |
GR/IR clearing account |
Vendor account | |||||
1 |
1 |
200 |
|
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