QAD 2017 Enterprise Edition
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Purchasing
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Calculating Purchase Price Variances
Calculating Purchase Price Variances
Two types of variances can be calculated when purchasing materials:
• Purchase price variance
• Accounts payable variance
Purchase price variance is the difference between the purchase order cost and the GL cost and is calculated when purchase orders are received.
Accounts payable variance is the difference between the invoice price and the purchase order cost and is calculated when the supplier invoice is matched with the supplier invoice in accounts payable. When a supplier invoice is confirmed, rate variances update inventory cost. In a multiple database environment, costs are updated in both the inventory and purchasing databases.
Note: A third type of variance is caused by exchange rate fluctuations between the time a foreign currency order is received and when the purchase receipt is matched with the supplier invoice.