Landing Cost of Inventory received through Stock Transfer Order
Being a principal consultant in SAP Business ByDesign for more than a decade now, I still find it challenging to find direct solutions for some of the functional gaps our customers ask for. Well, one could find a solution by thoroughly researching the functionality and test if that would fit the need.
I was asked by someone recently why don’t I share my experiences and solution workarounds that was provided to overcome a challenging situation and share the knowledge with ByDesign community.
In this article, you will learn how freight cost and other landing costs can be capitalized to an Inventory with a perpetual cost method as moving average which is received through stock transfer order. You already know and there is a standard functionality on how unplanned freight cost can be charged to Inventory received. However, we do not have an option when an Inventory is transferred using stock transfer orders.
The business case here is when materials are valuated as moving average and are transferred from one warehouse to another, the transportation cost is not capitalized to Inventory at receiving site. This is because, for example, the freight invoice expects a purchase order or Supplier Invoice when processing additional cost distribution.
As a workaround solution, For example, If the cost of freight was initially booked through a supplier invoice or a Journal entry to a P/L account with reference to the cost center, you could capitalize the cost of inventory using standard Journal Entry voucher type 00087 – Manual Entry for Materials and screen variant 630 – Manual Write-up/Write-Down or Materials to transfer the cost from GL account to Inventory. Below are some screenshots to help you understand this process.
For this process to work, you need to ensure you have enough quantity in stock when capitalizing the cost. Also, when crediting the expense account, provide the original cost center to which was initially charged. Once posted, you will see the moving average cost of material has automatically updated based on the charge.
Until we see standard functionality, this should help users to account for unplanned landing costs on inventories received via STOs.
Please leave a comment below or questions you may have that I would love to answer. Click here for more topics on ByDesign.