A/R Credit Note uses incorrect price to affect Last Purchase Price and Moving Average

[Johan_H]

Hi,

Currently in our system, when posting an A/R Credit Note, item stock is returned with a value according to the sales price instead of according to the cost price at the moment of sales.

Example:

Item	Purchase Price	Purchase Quantity	Total	Moving Average
Doohickey	1.00	100	100	1.00
Doohickey	1.50	100	150	1.25
Doohickey	2.00	100	200	1.50

Last Purchase Price 2.00, total stock value 450

When I sell 100 Doohickeys, I know it costs me 1.50/pcs. I put 100% margin on it, and sell it for 3.00/pcs. My total margin is 150 and the value of my left over stock is 300.

When my customer returns the 100 Doohickeys, I pay back 150, and my stock value increases by 150

Item	CN price	Returned Quantity	Total	Moving Average
Doohickey			previous	1.50
Doohickey	3.00	100	300	2.00

Now Last Purchase Price is 3.00 and total stock value is 600.

For all intents and purposes both the Last Purchase Price and Moving Average are incorrect.

My question is, is my reasoning flawed or is this system behavior wrong or is this a matter of a setting somewhere?

Regards,

Johan

EDIT: this system behavior only happens when the Credit Note is not based on a source transaction.

[felipeprevente]

Hi @Johan_H ,

Based on my understanding, AR Credits can either be posted as standalone or copied from the AR Invoice. However, when they are copied from the AR Invoice, it is typical for the COGS to be posted as the same amount as it was when in the outbound. Which process are you guys using?

Cheers,
Felipe

[Johan_H]

Hi Felipe,

We use Copy to, Copy from and stand alone. The system behavior described appears to happen with stand alone only.

Regards,

Johan

[felipeprevente]

Hi @Johan_H ,

As I mentioned, by copying the AR Credit from the Invoice, SAP assumes the returning cost is the same as the outbound. If you enable the field "item cost" within form setting, you'll see what is the cost being attributed on both inbound/outbound. Notice in the below screenshot this very scenario. Pay attention to the "Enable Setting Cost" and "Return Cost" greyed out.

However, SAP has a feature that enables the return price to be set manually or according to the price list we want, when the document is not based on another Admin > Sys Initialization > Document Settings > AR Credit. This can be useful for items using Standard cost method, but for moving average and FIFO it might cause some trouble if not handled carefully.

Finally, see below how your your cost can get messed up if you are raising a standalone Credit and set up the return cost to be either based on a price list or manually inputted. The users can simply put the value they think is the correct or the price list configured as showed above might be "doing the job" by itself.

Check whether this applies to your case and let us know.

Hope it makes sense.

Cheers,
Felipe

[prudhvi_ravipati]

Hi @Johan_H ,

When the A/R Credit Memo is not based on Source Document.

Then check following setting "Document Setting - Per Document Tab - A/R Credit Memo" whether "Allow Setting Item Cost When Document is Not Based" is marked or not.

If it Marked then check what is the return cost price list defined over there.

In Your stand alone A/R Credit Memo, this option will be hidden in form Setting, If we uncheck this option then it will post based on at that moment Item Cost for the product.

please check and update. If Solution is correct Mark the reply as "Answer".

Thanks,
@prudhvi_ravipati 

[LoHa]

Hi Johan,

I think i would be a good question for SAP ;-).

Have you tried the different scenarios Felipe mentioned? (Copy From vs Alone).

A least I'm sure somebody missed to set a minus when calculating 😎🤣

regards Lothar