Results 1 to 5 of 5

Thread: Adjusting Cost Price Differences in Pastel

  1. #1
    New Member
    Join Date
    Oct 2020
    Location
    Cape Town
    Posts
    3
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Adjusting Cost Price Differences in Pastel

    Hi
    We are clothing manufacturers and always pre cost our products which includes labour and materials. Once we receive an order we will proceed with production.
    We then track and record labour and material costs used for that specific product during production and there is usually a variation in the actual CP to the pre costed price. This is done on a separate programme.
    At the time of invoicing accounts department have been using the pre costed price to create the product listing in Pastel.The cumulative difference between the two cost prices is significant. Of course salaries, wages and purchases are also captured in Pastel (V18)
    How do we adjust to compensate for the difference in the two cost prices?

    Many Thanks
    Chris

  2. #2
    Gold Member
    Join Date
    Feb 2016
    Location
    Johannesburg
    Posts
    713
    Thanks
    74
    Thanked 199 Times in 178 Posts
    Hi Krisray

    If the standard cost generates a debit to cost of sales and credit to stock, it will mean that stock is overstated and cost of sales understated. Without getting too technical, usually a supplier invoice results in debit stock credit suppliers and your subsequent sales at standard cost credits stock and debits cost of sales. At month end you would normally adjust the variance, which is basically the actual cost less standard cost and results in debit cost of sales and credit stock.

  3. #3
    New Member
    Join Date
    Oct 2020
    Location
    Cape Town
    Posts
    3
    Thanks
    0
    Thanked 0 Times in 0 Posts
    Thank you for your reply Andromeda.
    I dont fully understand why there would be a credit to stock .
    In our case the stock value is overstated as a higher "Costed CP" was applied , yet the Actual CP is much lower.

  4. #4
    Gold Member
    Join Date
    Feb 2016
    Location
    Johannesburg
    Posts
    713
    Thanks
    74
    Thanked 199 Times in 178 Posts
    I will try to better explain. Assume you buy 1000 widgets from ABC Limited at R1 each. Later you sell 800 widgets to XYZ CC and the standard costing system accounts for the sale at only 90 cents each. From what I gather you are saying these are you entries and stock result:

    Debit Stock 1000 at R1. R1000 Sales at actual
    Credit Creditors 1000 at R1 (R1000) Sales at actual
    Debit Debtors 800 at R1.50 R1200 Sales at actual
    Credit Sales 800 at R1.50 (R1200) Sales at actual
    Debit Cost of sales 800 at 0.80 (SC) R640 Cost of sales at SC
    Credit Stock 800 at 0.80 (SC) (R640) Stock movement at SC

    The resultant balances are:
    Debtors Debit R1000 Correct
    Sales Credit (R1000) Correct
    Cost of sales Debit R640 Incorrect should be R800
    Stock Debit R360 Incorrect should be R200

    Required journal
    Debit cost of sales 800 at 0.20 R160 The difference between actual and standard cost
    Credit stock 800 at 0.20 (R160) The difference between actual and standard cost

    The resultant balances are:
    Debtors Debit R1000 Correct
    Sales Credit (R1000) Correct
    Cost of sales Debit R800 Correct R640 + R160 = R800
    Stock Debit R200 Correct 200 units @ R1

    If the Standard Costing is higher or more than actual cost, then the entries are reversed.

  5. #5
    New Member
    Join Date
    Oct 2020
    Location
    Cape Town
    Posts
    3
    Thanks
    0
    Thanked 0 Times in 0 Posts
    Thank you for the detailed explanation Andromedia.
    We have applied this method and Cost Of Sales and Stock where successfully adjusted.
    Thanks again.

Similar Threads

  1. Replies: 2
    Last Post: 26-Mar-18, 10:12 AM
  2. Replies: 2
    Last Post: 09-Oct-15, 07:51 AM
  3. Manufacturing company cost price in Pastel Partner v11
    By paulsevenster in forum Accounting Forum
    Replies: 2
    Last Post: 25-Feb-14, 04:15 PM
  4. [Question] Adjusting year end in pastel express
    By Penny in forum Accounting Forum
    Replies: 2
    Last Post: 21-Sep-12, 09:04 AM
  5. Cost price notebooks for the World Cup!
    By RKS Computer Solutions in forum Technology Forum
    Replies: 48
    Last Post: 13-Oct-07, 04:18 AM

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •