Variance Accounts

This table describes important information about variance accounts:

Account	Description
Variance accounts for weighted average costs	If you purchase items to inventory, you might sell some of the items before you create a voucher. If you maintain a weighted average inventory cost for the items, you must set up two variance accounts in AAIs, one for the items sold and the other for the items remaining. For example: You buy 10 items at 10.00 for a total of 100.00 You sell two of the items You create a voucher for 90.00 (the supplier bills you for 9.00 each) A variance exists of 10.00. If you do not set up two variance accounts, the system applies the entire 10.00 variance to the 8 items that remain in stock. This causes the weighted average cost of the items to be inaccurate. When you set up two variance accounts, the system applies an 8.00 variance to the items that remain in stock and a 2.00 variance to the items sold. This enables the system to calculate the correct weighted average cost for the items that remain in stock. You must set up AAI table 4332 to have the system create a separate variance for items no longer in stock.

Account

Description

Variance accounts for weighted average costs

If you purchase items to inventory, you might sell some of the items before you create a voucher. If you maintain a weighted average inventory cost for the items, you must set up two variance accounts in AAIs, one for the items sold and the other for the items remaining.

For example:

You buy 10 items at 10.00 for a total of 100.00
You sell two of the items
You create a voucher for 90.00 (the supplier bills you for 9.00 each)

A variance exists of 10.00. If you do not set up two variance accounts, the system applies the entire 10.00 variance to the 8 items that remain in stock. This causes the weighted average cost of the items to be inaccurate.

When you set up two variance accounts, the system applies an 8.00 variance to the items that remain in stock and a 2.00 variance to the items sold. This enables the system to calculate the correct weighted average cost for the items that remain in stock.

You must set up AAI table 4332 to have the system create a separate variance for items no longer in stock.