Negative assemblies can cause balance adjustment transactions to be made in order to make the balance of the assembly transaction zero. This is because the components are using their current/last cost instead of the assembly product's.
What is a variance transaction
Variance transactions may be created by Acctivate and are associated to negative assembly transactions. The variance transaction may show as a balance adjustment (bal adj) transaction on the transactions tab of the assembly item, the quantity will show as zero and the session number will be the same as the negative assembly. The purpose of the variance transaction is to adjust the value of the assembly transaction so that the assembly transaction balances to zero. In the event that the cost of a component item changes due to backdating a receipt, for instance, the balance of the assembly would no longer equal zero.
How a negative assembly is costed
Disassembling an assembly by posting a negative assembly will increase the component quantity and component value and decrease the assembly quantity and value. Since you are putting the components back into stock, Acctivate will use the warehouse average unit cost, at the time the assembly transaction is posted, to calculate the value the components should be increased by. This component value is also used in order to calculate the value of the assembly transaction, which is equal to the sum of the component costs. In short, this calculation is the sum of component costs minus assembly cost equals zero.
Here is an example of this scenario. You can follow along in the Demo company.
- In your Demo company, open Assembly product ‘T1024’.
- Select the Components tab. Notice the Avg Cost and the quantity of each of the components. If you posted a Assembly for a quantity of one, the cost would be calculated by adding the costs of each of the components. In this case, that would be calculated as (4*$2.25) +$35 = $44.
- Now, post a negative assembly for the same product, same warehouse, and same date. The assembly amount should now show as $-44. Posting a negative assembly will add the components back into stock. Acctivate will use the unit cost of the warehouse to add the components back into stock. So, if you posted a negative assembly you would remove the sum of the calculated component costs amounts from the assembly item.
- Now, post a receipt transaction on one of the components with a transaction date prior to the negative assembly transaction. As an example I am posting a receipt for ‘TL1024’ two days prior to the transaction date of the negative assembly, for a quantity of 10, and for a value of $100. This changes the unit cost from $2.25 to $2.40 (the cost is actually rounded from 2.40196).
- Refresh the transactions tab on the Assembly product. You should now see a ‘Bal Adj’ transaction with the same session number as your negative assembly, which is adding $.61 to the assembly transaction, calculated by the new extended cost minus the originally calculated cost of the assembly component (4*2.40196) – (4*2.25).