Cost variance account?

[qamer.financial]

PO Distribution created three accounts cost variance, Inv valuation, Receiving Inspection. can any body tell why its created a Cost variance account

[sivasubbusn]

If your Organization is Standard Costing Organization then Purchase price variance account will get hit.

[qamer.financial]

Hi
.
We are using Average costing Method. Can you please desc in wat scenario it will generate Cost variance account

Regards,

[sivasubbusn]

HI,

If your organization is Average costing organization and if you have enabled "Allow Negative Balances" in the Organization parameter then cost variance account will get hit. This will work as follows.

1. If your on-hand qty is -10 (Negative)
2. You are receiving 20 Nos against a purchase Order.
3. 10 Nos cost get adjusted against the -10 (Negative) transaction cost
and difference will get hit the cost variance account.

Hope it is clear now.

[qamer.financial]

Hi

Its not checked the Negative balance allow in Inv Parameters.

[sivasubbusn]

Already do u had any negative inventory for that item ?