Both the quantity and unit price are outside the tolerance range but have been approved.
The system processes the transaction using the invoice values for both quantity and unit price, applying any necessary adjustments or line charges.
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:
Accept the Approved Quantity: The system accepts the invoiced quantity of 220 units as it has been approved despite being outside the tolerance range.
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.
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
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.
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.