Hi,

When we are using purchase (material) surchages, BaaN increases the value of the Purchase receipt. However the value of the result is also increased. For ex:

Suppose the material value is Rs 100. The Surcharge is 10% on total cost. Then the calculated standard cost price of the item will be 110. If a purchase order is prepared for 125 then the receipt value should be for 110 and variance should be (125-110) 15.However BaaN passes receipt entry for 110 (100+10) but surprising passes variance entries for 27.5 (25+2.5) i.e. baan is passing a proportianal surcharge amount as variance.

Could somebody rationalise this for me.

Warm Regards

Sai Krishna

the variance figure should be 25 and not 27.5. But definitely the variance should not be 15.

The credit account for surcharges should be booked seperately to a recovery account like transportation recovery, overhead recovery etc.

The variance is the PO price negotiated with the supplier v/s the standard price without surcharges. This helps in inventorising the surcharges and at the same time tracking recoveries.

whether the variance calculation should take the surcharge into consideration is a point of opinion. Even if we assume that the surcharge should not be taken into consideration then there should be no variance generated for the surcharge component.

Sai Krishna

Dear Sai,

I don't know your Baan version, so I'll be talking in term of BaanERP 5.0c

When you define surcharge as something to be incurred at time of receipt of certain item in certain WH, then everytime the item enter that particular WH the surcharge will be charged.
If you specify a fixed price surcharge, say x, then no matter what price you pay for the goods, the surcharge price will stay at x. Hence there'll be no PPV on surcharge side.

However, since you define surcharge at 10% of total costs, then the surcharge price will vary with the actual price you pay. In this example where pur price is 125, the surcharge will be 12.5, giving total price of 137.5. The total std cost price is as you said 110. Then the PPV will be 137.5-110=27.5

Rgds,
Paul

It is correct!
I have tested the scenario in BaanIV C4 system.

From the session Display integration transactions by project/order :

Receipt 104(Cost Comp) 100 D
Receipt 300(Cost Comp) 10 D
Result 104 25- D
Result 300 2.50- D

Integration lines is separated by cost component, it will be more clearer.

I am sorry. I read the 10 % as 10 and assumed to be a fixed amount.

Only one more aspect to be borne in mind is that during bill passing if any additional variance is generated due to partial matching then one more additional result entry will be generated under the surcharge CPC. This will be equal to surcharge % * result of the material component CPC.