How does adding expenses to Purchase Order affects cost price of products?

Hi, today we'll discuss "How does adding expenses to a purchase order affect the cost price of products?"

Let's create a purchase order. You can add the expenses to your purchase after creating it.

In order to add the expenses, you have to perform the following steps:

1. We're considering these two products for the whole scenario. The SKU (AR-00057) currently has 33 sellable units, while the SKU (AR-00032) has 5 units. Now, create a purchase order for these SKUs.

2. After creating a purchase order, click on the PO. You can add the expenses to your purchase order by clicking on the "Add expenses" button.

3. After adding the expense to the purchase order, Click on the save button.

4. By clicking on the expense module under the financials label, You can see the complete breakdown of the expenses that you have added in your purchase order.

5. Now, click on the products screen. The cost price will be updated by adding the expense in the purchase order.


Calculation:

Purchased 7 units AR-00057  @ PKR 1000/- Purchase Subtotal PKR 7000/-
Purchased 5 units of AR-00032 @ PKR 500/- Purchase Subtotal PKR 750/-

Expense for AR-00057:

Purchase subtotal ÷ Net amount * Total expenses 
7000 ÷ 7750 * 3000 = PKR 2709.68/-

Expense for AR-00032:

Purchase subtotal ÷ Net amount * Total expenses 
750  ÷ 7750 * 3000 = PKR 290.32/-

Purchase cost price for AR-00057 with expense according to the number of purchased units:

Purchase subtotal + Purchase Expense ÷  No. of units purchased 
7000 + 2709.68 ÷ 7 = PKR 1387.09/-

Purchase cost price for AR-00057 with expense according to the number of purchased units:

Purchase subtotal + Purchase Expense ÷  No. of units purchased
750 +  290.32  ÷ 5 = PKR 208.064/-