Using the option Allow method of appropriation (used in purchase invoice)

Appropriation of additional cost depends on the business requirement. Additional cost can be appropriated to the stock items to arrive at the total stock item value. The option Allow method of appropriation (used in purchase invoice)? in the Ledger Configuration can be used to appropriate cost to stock items that are purchased. The cost can be appropriated based on the quantity purchased or the value of the stock item.

Illustration

ABC Company wants to purchase stock items for cash and appropriate cost based on the quantity purchased. For this, ABC Company should enable the option Allow method of appropriation (used in purchase invoice)? in the F12: Configure of the ledger master, as shown below:

Under the option Method of appropriation in purchase invoice? in the ledger master, ABC Company can select Appropriate by Qty in the expense ledger as shown below:

ABC Company then records a purchase voucher for stock items, with Transport Charges, based on quantity, as shown below:

Note: If a purchase ledger is not available already, press Alt+C in the Purchase ledger field to create one.

Since equal quantities of the stock items are purchased, the transport charges of Rs. 52,500 is appropriated at 1:1 ratio to each stock item. ABC Company has to calculate the ratio in the following manner:

Therefore, the transport charges of Rs. 52,500 will be divided equally and added to the values of the stock items. The total value of each stock item can be calculated in the following manner:

ABC Company can verify the appropriation of cost based on the quantity of stock items purchased, in the Stock Summary report, as shown below:

Similarly, for the same purchase voucher, ABC Company can also appropriate cost to stock items based on their value by selecting Appropriate by Value under the option Method of appropriation in purchase invoice? in the ledger master, as shown below:

Here, the transport charges (Rs. 52,500) is appropriated based on the stock item value. ABC Company has to calculate the ratio in the following manner:

Therefore, the transport charges (Rs. 52,500) will be divided in the ratio 1:20 and added to the values of the stock items in the following manner:

ABC Company can verify the appropriation of cost based on the stock item value, in the Stock Summary report, as shown below: