Correction for costs of completed but not yet received quantities

If you apply actual costing, you often must deal with completion of a production order in partial quantities. Only costs that are made for the quantities that are already received in the warehouse must be incorporated in inventory valuation. The costs that are made for completed quantities that are not yet received in the warehouse must be left out. Therefore, a correction factor is applied by LN.

Example

Quantity completed = 17.
Order quantity already received in warehouse = 10.
Quantity to be received = 2.
Actual costs until now = EUR 17,000.

In this situation, costs are already made for 17 items: EUR 17,000. After the previously mentioned 2 items have been received in the warehouse, 12 item (10 + 2) are in the warehouse. Consequently, the costs for receipt posting based on the actual costs that are made must be the costs for 12 items. Therefore, a correction of 12/17 is applied. The total value of receipt postings after receiving the two items in the warehouse is:

17000 * 12/17 = EUR 12,000