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To simplify the scenario I suppose:
There is only one stock batch (we get same results for
different accounting rules: FIFO, LIFO or AVCO).
I also suppose that we have detailed management accounting.
Scenario:
1. Stock Receipt: 100 units * 100 EUR to warehouse 1.
2. Selling: 20 units to customer AAA from warehouse 1.
3. Stock taking: 5 units from warehouse 1.
4. Stock movement: 10 units from warehouse 1 to warehouse 2.
5. Selling: 5 units to customer BBB from warehouse 2.
6. Invoice for transportation of 100 units to warehouse 1 (see p.1): 1000 EUR.
7. Invoice for transportation of 10 units to warehouse 2 from warehouse 1 (seep.4): 100 EUR.
Accounting alghorithms:
Ideal one:
- There are 100 units * 100 EUR in warehouse 1, total amount is 10000 EUR.
- Stock issue of 20 units * 100 EUR from warehouse 1 to customer AAA, total amount of issue is
2000 EUR, the remaining part of the stock is 80 units * 100 EUR, total amount of warehouse 1 is 8000 EUR.
- Stock taking difference of 5 units * 100 EUR, total amount is 500 EUR, the remaining part of the
stock is 75 units * 100 EUR, total amount of warehouse 1 is 7500 EUR.
- Stock movement: Stock issue of 10 units * 100 EUR from warehouse 1 and stock receipt of them to
warehouse 2. The remaining part of the stock in warehouse 1 is 65 units * 100 EUR, total amount of
the warehouse 1 is 6500 EUR, the remaining part of the stock in warehouse 2 is 10 units * 100 EUR,
total amount of warehouse 2 is 1000 EUR.
- Stock issue of 5 units * 100 EUR from warehouse 2 to customer BBB, total amount of issue is
500 EUR, the remaining part of the stock is 5 units * 100 EUR, total amount of warehouse 2 is 500 EUR.
- Transportation cost of 100 units to warehouse No 1, detailed description:
6.1. Increase of cost price of received stock (see p.1) by 1000 EUR. It should be 110 EUR (Not 100 EUR!)
in warehouse 1 ((10000 EUR + 1000 EUR)/100 units)
6.2. Increase of issue of goods sold to customer AAA from warehouse 1 by 200 EUR.
(20 units should "go" at 110 EUR, but not at 100 EUR: (110-100)*20=200). Gross profit of
goods sold to the customer AAA from warehouse 1 should be decreased by the same amount (200 EUR).
6.3. Increase of stock taking result (see p.3) by 50 EUR (110-100)*5=50 EUR.
6.4. Increase of issue of 10 units from warehouse 1 and increase of receipt of them to warehouse 2
as a result of stock movement (see p.4) by 100 EUR. (110-100)*10=100 EUR
6.5. Increase of issue of goods sold to the customer BBB from warehouse 2 by 50 EUR. (5 units
should "go" at 110 EUR, but not at 100 EUR: (110-100)*5=50). Gross profit of goods sold
to the customer BBB from warehouse 2 should be decreased by the same amount (50 EUR).
- Transportation cost of stock movement of 10 units from warehouse 1 to warehouse 2:
7.1 Increase of cost price of received stock by 100 EUR. It should be 120 EUR (Not 110 EUR!)
in the warehouse 2 ((1100 EUR + 100 EUR)/10 units).
7.2 Increase of issue of goods sold to the customer BBB from warehouse 2 by 50 EUR. (5 units
should "go" at 120 EUR, but not at 110 EUR: (120-110)*5=50). Gross profit of goods sold
to the customer BBB from warehouse 2 should be decreased by the same amount (50 EUR).
Same in the table:
Marked bold is a final warehouse state.
If operations had been done in the right order:
| Oper No |
Price per unit |
Qty |
Amount |
Cumulat. Amount |
Cumulat. Qty |
Price per unit |
WH ID |
| 1. |
100 |
+100 |
+10.000 |
10.000 |
100 |
100 |
1 |
| 6. |
+1.000 |
11.000 |
100 |
110 |
1 |
| 2. |
110 |
-20 |
-2.200 |
8.800 |
80 |
110 |
1 |
| 3. |
110 |
-5 |
-550 |
8.250 |
75 |
110 |
1 |
| 4. |
110 |
-10 |
-1.100 |
7.150 |
65 |
110 |
1 |
| 4. |
110 |
+10 |
+1.100 |
1.100 |
10 |
110 |
2 |
| 7. |
+100 |
1.200 |
10 |
120 |
2 |
| 5. |
120 |
-5 |
-600 |
600 |
5 |
120 |
2 |
If operations had been done using existing order:
| Oper No |
Price per unit |
Qty |
Amount |
Cumulat. Amount |
Cumulat. Qty |
Price per unit |
WH ID |
| 1. |
100 |
+100 |
+10.000 |
10.000 |
100 |
100 |
1 |
| 2. |
100 |
-20 |
-2.000 |
8.000 |
80 |
100 |
1 |
| 3. |
100 |
-5 |
-500 |
7.500 |
75 |
100 |
1 |
| 4. |
100 |
-10 |
-1.000 |
6.500 |
65 |
100 |
1 |
| 4. |
100 |
+10 |
+1.000 |
1.000 |
10 |
100 |
2 |
| 5. |
100 |
-5 |
-500 |
500 |
5 |
100 |
2 |
| 6.1. |
+1.000 |
7.500 |
65 |
1 |
| 6.2. |
-200 |
7.300 |
65 |
1 |
| 6.3. |
-50 |
7.250 |
65 |
1 |
| 6.4. |
-100 |
7.150 |
65 |
110 |
1 |
| 6.4 |
+100 |
600 |
5 |
2 |
| 6.5. |
-50 |
550 |
5 |
2 |
| 7.1. |
+100 |
650 |
5 |
2 |
| 7.2. |
-50 |
600 |
5 |
120 |
2 |
Let's talk about the other algorithms:
I know a few Swedish companies where any oncosts are always written off because of negligible value
of these costs in comparison with warehouse value.
Other companies write off only part of these costs proportionally to the amount of goods already
"gone" from the target warehouse.
Still others want to take the second way except for a part of those costs that are based on
the value of goods moved from warehouse 1 to warehouse 2, but haven't been sold yet.
Which way is affordable for you? First? Second? Third? Perhaps ... ninth?
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