Case 8b, 9b: Quantity Outside Tolerance (Approved), Unit Price Outside Tolerance (Approved)

Scenario:

Both the quantity and unit price are outside the tolerance range but have been approved.

Action:

The system processes the transaction using the invoice values for both quantity and unit price, applying any necessary adjustments or line charges.

Example:

• Purchase Order (PO):

  • Quantity: 200 units

  • Unit Price: $25.00 per unit

  • Total Amount: $5,000.00

• Invoice Received:

  • Quantity: 220 units (outside tolerance of 10%, approved)

  • Unit Price: $27.00 per unit (outside tolerance of 8%, approved)

  • Total Amount: $5,940.00

• Tolerance Levels:

  • Quantity Tolerance: ±5%

  • Unit Price Tolerance: ±2%

Since both the quantity (220 units) and unit price ($27.00) are outside the acceptable tolerance limits but have been approved, the system will:

1. Accept the Approved Quantity: The system accepts the invoiced quantity of 220 units as it has been approved despite being outside the tolerance range.

2. Accept the Approved Unit Price: The system accepts the invoiced unit price of $27.00 per unit as it has been approved despite being outside the tolerance range.

3. Calculate the Total Amount: The system calculates the total amount based on the approved invoice values:

   • Total Amount = Quantity × Unit Price

   • Total Amount = 220 units × $27.00 per unit = $5,940.00

4. Apply Necessary Adjustments or Line Charges: If applicable, the system may apply any additional line charges or adjustments based on the organization's policies for handling approved variances.

5. Process the Invoice: The system processes the invoice using the approved values for both quantity and unit price, finalizing the transaction at the total amount of $5,940.00.

This approach ensures that the transaction is processed according to the approved variances, allowing flexibility while maintaining accurate financial records.