The form shows information about both manual changes, and any changes made using the Mass modify prices process.
When you open the form, you will see one line for each part, including information about the most recent APP calculation. You can also use the selection options on the left side of the form to display historical calculations. For each line, you will see all information relating to the APP calculation, including:
Note: If too many lines are displayed on this form, you can choose to delete lines. To do so, run the Delete average purchase price lines process.
Calculation of the average purchase price
The APP is a weighted average, as its calculation takes into account the ratio of the number of parts already in stock, and the number of new parts arriving. This is clear from the calculation formula:
New average purchase price
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=
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(Current stock quantity * Current average purchase price + Received stock quantity * Purchase price)/ (Current stock quantity + Received stock quantity)
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Example of calculation of average purchase price
Current average purchase price
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=
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$ 14
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Current stock quantity
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=
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5 pieces
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Received stock quantity
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=
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2 pieces
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Purchase price
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=
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$ 15
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New average purchase price = (5 * 14.00 + 2 * 15.00) / (5 + 2) = $ 14.29
Purchase order price versus purchase invoice price
When calculating the APP, both the purchase order price and the purchase invoice price are taken into account. When a part is received, Isah uses the purchase order price. Where necessary, a correction is posted at the time the purchase invoice is processed permanently if the actual price (the purchase invoice price) differs from the purchase order price upon receipt.
Purchase invoice price already known before receipt
Sometimes, the purchase invoice price is already known before the receipt of the goods has been processed. In that case, the APP calculation uses the purchase invoice price, provided that it is the last purchase invoice for the purchase order line, with authorization type 'Invoice line authorized; last invoice', and that the purchase invoice has been processed permanently.
This last purchase invoice may have been preceded by purchase invoices of the 'Invoice line authorized' authorization type. The prices posted in those processes are used to calculate an average purchase invoice price per piece. The formula used for this calculation is:
Average purchase invoice price per piece
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=
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(Sum of all total sums on invoice lines) / (Sum of all purchase invoice quantities)
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Partial receipts and purchase invoices
For partial receipts, the purchase order price is used to determine the new APP. Until the final invoice for a purchase order line has been processed, the APP is also calculated on the basis of the purchase order price. A different price on an earlier purchase invoice ('Invoice line authorized') for the same purchase order line therefore does not have any consequences yet.
If the last receipt has been processed (the receipts are then considered as financially complete), and the last purchase invoice is processed, any purchase invoices previously posted for the same purchase order line ARE taken into account. The formula used is the same as for the calculation of an average purchase invoice price per piece:
Average purchase invoice price per piece
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=
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(Sum of all total sums on invoice lines) / (Sum of all purchase invoice quantities)
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Registration of APP calculation
Whenever the average purchase price is recalculated, the recalculation data are saved for reference. These data are available on the Average purchase price form in the Parts module, Overviews folder. Any manual changes and any changes made by the Mass modify prices process are also registered on this form.
APP registration for all parts
In Isah, the average purchase price (APP) of all parts is calculated and saved. Only for parts for which the stock valuation method is 'Average purchase price', this price is also filled in in the FVP/APP field. For parts for which the stock valuation method is 'Fixed valuation price', the FVP/APP field is not adjusted after recalculation of the average purchase price.
It is possible, however, to use this average purchase price to adjust the FVP. To do so, use the Mass modify prices process, which you could run once a year, for example. This way, the FVP will be the same throughout the year, and once a year you use the average purchase price to adjust the FVP. If you still want to have the FVP for parts adjusted to the average purchase price on a continuous basis, you must change the stock valuation method for the part. You can only do so, however, when the stock of the part has run out.
APP calculation if negative stock is allowed
If the total current stock of a particular part is negative, the average purchase price of that part is recalculated all over again as soon as you register a receipt that brings the stock back up to a positive level. This calculation does not take into account the old average purchase price. The APP is calculated as follows:
Average purchase price
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=
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Purchase value / Quantity received
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If the above calculation is not desirable after the stock has reached a negative level, you must deselect the Allow negative stock check box.
Example of APP calculation after stock has reached negative level
Current average purchase price
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=
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$ 15
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Current stock quantity
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=
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-10 pieces
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Received stock quantity
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=
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15 pieces
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Purchase price
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=
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$ 17
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The new average purchase price is calculated as follows:
- The old APP of $ 15 is ignored in the calculation.
- The new APP is 255/15 = $ 17.00.
- After registration of the receipt, your total current stock consists of 5 pieces. The stock value is 5 * $ 17.00 = $ 85.00.
Calculation of the APP