Standard Price of the material is 1,82,486 IDR/Kg

PO price is 20.59 USD/Kg i.e 1,88,398.5 IDR/Kg.

When PO is raised, there is no FI / PA entry in the system. When GR -Goods Received against the PO, there is a FI entry as: Debit Credit Debit / Credit In our example its Debit Credit Debit Stock Raw material GR IR clearing a/c Purchase Price Variance =50*1,82,486 =50*1,88,398.5 =50*5,912.5 91,24,300.00 -94,19,925.00 2,95,625.00 Stock Raw material GR IR clearing a/c Purchase Price Variance @ Standard Price @ PO Price @ diff btwn Std P and PO Price

Also there is a material document posted with mvt type 101 - GR goods receipt

Now when Invoice is received (IR is done), there is again an FI entry as: If Invoice price is same as PO price, Debit Credit GR IR clearing a/c Vendor a/c @ PO Price @ PO Price

If Invoice price is different from PO price Debit Credit Debit / Credit GR IR clearing a/c Vendor a/c Purchase Price Variance @ PO Price @ Invoice Price @ diff btwn PO Price and Invoice price

So effectively GR IR was credited with PO price and again debited with PO price and hence nullified. And Stock a/c is debited and a corresponding credit is also given to the Vendor. So accounting wise all is perfect uptill now. Here PO price and Invoice price are same but there is Exchange rate difference between the GR and IR dates and hence the difference is posted to Stock Revaluation a/c

There is no document required in material management as already mvt 101 was posted during GR. The vendor is paid off as per payment terms and this completes the Order to Cash cycle.

Now this raw material will be issue for production. Let us analyze further. Raw material is issue for production. So there will be entries in both FI and MM. In FI