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Oct 04, 2012 at 06:25 AM

Manage difference in quantities in inventory , excise & sales order


Dear Guru ,

1) We have batch managed finished material where each piece cut out of the original block is taken in inventory as one batch with size in square meters as quantity for the batch. Although the pieces are of uneven shapes ,for convenience , average size for each piece is considered & all batches produced from one source block are taken in finished goods inventory with equal quantity. so let us say ,total inventoried quantity of 20 pieces sums up to 18.54 m2 .

2) But when the pieces lying in inventory for few months are to be taken out of the factory premises for sale , the excise authorities measure them & may declare the same quantity to be 18.74 m2 instead of 18.54 m2 as per inventory records . As we have to go as per the Govt. authorities , we will have to update our excise registers with 18.74 m2.

3) Now the third discrepancy comes when normally order placed by the customer is in Round figures , say in this case the customer may order 20 m2 , but will be actually delivered 18.54 m2 , and the company does not want to delivered / billed quantity in decimals to avoid confusion or raise debates from customer.

Since the event No.2 will happen much later in time after the event No.1 , there is no way to avoid mismatch between 1 & 2 .

One of the way to handle the above variations in the quantity , I have thought of using the "physical inventory method" to match the quantity in inventory to that of excise quantity. But this will cause posting of Gain / loss in the current posting period based on inventory quantity is lesser or more than the excise quantity.

Also avoid any mismatch in the inward & outward quantity entries in the RG1 register , we will update the inward entry in RG1 only after the excise authorities measure the outgoing quantity & give their value.

Please give your valuable advice about the above can be handled in correct & legal manner , whether solution I thought is o.k. ?

Thanks & Regards,

Anil Shanbhag