PO Price Adjustments for Consumed Raw Materials and Finished Goods Costing

Summary:

Hi Everyone,

I am looking for advice on the best practice for handling retroactive Purchase Order price adjustments in the manufacturing process.

Our client has the following business scenario:

1. A PR is created and converted to a PO for Raw Materials.
2. The Raw Materials are received into inventory.
3. These materials are issued to a Work Order and consumed in the manufacturing process.
4. The Finished Good (FG) is completed and placed into inventory.
5. After the FG is produced, a price adjustment is received for the original PO (e.g., the Raw Material price changes from 10 USD to 20 USD).

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