Invoice Price Variance Account(IPV)
To Accumulate invoice price variance for the organization. IPV account is usually an expense account, which is used at the time of creating requisition or PO. When a corresponding invoice is matched and approved, AP uses this account from PO to record the invoice price variance entries. It is the difference between the purchase order price of the inventory item and the actual invoice price multiplied by the quantity invoiced.
Invoice Price Variance Invoice Qty x (Invoice Price - PO Price) x Invoice Rate
Invoice Price Variance Report
The Invoice Price Variance Report shows the variance between the invoice price and the purchase price for all inventory and work in process related invoice distributions. Payables records invoice price variances when the invoices are matched, approved, and posted.
Prerequisites
Payables records invoice price variance only when you have inventory or work in process related invoices. Use this report only if you use Inventory by itself or with Work in Process.
Invoice Price Variance Process Accounting:
Note: Below Working and results are only applicable where Purchase Orders and Invoice are not routed through LCM Module. For LCM Enabled Items IPVs are routed and transferred to Inventory directly from LCM.
Invoice Price Variance is variance between the invoice price and the purchase price for all inventory and work in process related invoice distributions. Payables records invoice price variances when the invoices are matched, approved, and posted.
Scenario:
Let's Put up a scenario here. We will be receiving an item in Inventory which has currently no On Hand Balance or Unit Cost in Inventory.
We Booked a Purchase Order for Quantity 100 at Unit Price of USD 10. We did the Receipt of the booked Quantity 100 at 01-May-2015 and receipt delivery was made on same date with all quantity accepted.
Before receipt of Invoice Quantity 90 was consumed and charged to production on 03-May-2015 at Unit Cost of USD 10. On 07-May-2015 Invoice was received with Value of USD 1200 (100 Quantity x 12 Unit Price) against purchases made earlier and entered in system. Supplier had increased the Price with USD 2 per unit which will result in Invoice Price Variance of USD 200 which is transferred to Inventory.
Later at 09-May-2015 Quantity 5 (out of 10 remaining in On Hand after 90 Issued) was identified to be damaged and returned back to Supplier. The Invoice Line was discarded and Revised Invoice was entered in System with value of USD 1140 (Quantity 95 x Unit Price of USD 12). This change in invoice resulted in decreased Invoice Price Variance, the effect of which is to be transferred to Inventory now.
To Accumulate invoice price variance for the organization. IPV account is usually an expense account, which is used at the time of creating requisition or PO. When a corresponding invoice is matched and approved, AP uses this account from PO to record the invoice price variance entries. It is the difference between the purchase order price of the inventory item and the actual invoice price multiplied by the quantity invoiced.
Invoice Price Variance Invoice Qty x (Invoice Price - PO Price) x Invoice Rate
Invoice Price Variance Report
The Invoice Price Variance Report shows the variance between the invoice price and the purchase price for all inventory and work in process related invoice distributions. Payables records invoice price variances when the invoices are matched, approved, and posted.
Prerequisites
Payables records invoice price variance only when you have inventory or work in process related invoices. Use this report only if you use Inventory by itself or with Work in Process.
Invoice Price Variance Process Accounting:
Note: Below Working and results are only applicable where Purchase Orders and Invoice are not routed through LCM Module. For LCM Enabled Items IPVs are routed and transferred to Inventory directly from LCM.
Invoice Price Variance is variance between the invoice price and the purchase price for all inventory and work in process related invoice distributions. Payables records invoice price variances when the invoices are matched, approved, and posted.
Scenario:
Let's Put up a scenario here. We will be receiving an item in Inventory which has currently no On Hand Balance or Unit Cost in Inventory.
We Booked a Purchase Order for Quantity 100 at Unit Price of USD 10. We did the Receipt of the booked Quantity 100 at 01-May-2015 and receipt delivery was made on same date with all quantity accepted.
Before receipt of Invoice Quantity 90 was consumed and charged to production on 03-May-2015 at Unit Cost of USD 10. On 07-May-2015 Invoice was received with Value of USD 1200 (100 Quantity x 12 Unit Price) against purchases made earlier and entered in system. Supplier had increased the Price with USD 2 per unit which will result in Invoice Price Variance of USD 200 which is transferred to Inventory.
Later at 09-May-2015 Quantity 5 (out of 10 remaining in On Hand after 90 Issued) was identified to be damaged and returned back to Supplier. The Invoice Line was discarded and Revised Invoice was entered in System with value of USD 1140 (Quantity 95 x Unit Price of USD 12). This change in invoice resulted in decreased Invoice Price Variance, the effect of which is to be transferred to Inventory now.
