I understand how to find mfg-var and generally what causes it. In some cases I am able to back into it but am having some trouble with a particular job scenario.
In this case there are two real issues, the first of which is not all scrap was recorded on the job. The second is job was closed short 5000 prod qty vs 2654 completed(this is correct for this job, not enough material was supplied). There is 0$ of material variance all mfg-var is coming from labor and burden. We are on Avg costing. We made two partial shipments against this order.
I believe the posted mfg-var is correct and I am confident as to why it happened, but am not able to “prove it”.
Does anyone know how to back into this mfg-var number? What I am looking to do is to calculate this by hand to clearly show where the var came from. Does anyone know how to perform this calculation/what numbers to pull in to perform the math?
I would take a list of labor transactions sorted by Clock In Date/Time and a list of Shipments/Receipts to Inventory sorted by System Date/Time (not Transaction Date). If you total all labor transaction costs (Labor Hrs * Labor Rate) before each Receipt/Shipment, that should give you your +/- to start with. The balance at the end of all these transactions should be your variance.
The tricky part is that I think the average cost on shipments/receipts to inventory assume you will produce the full job amount. If the job is for 5000 parts and you’ve put $500 of labor cost into making 1000 parts and ship those, I think (would need confirmation here since we don’t use average cost for manufactured parts) Epicor will use $500/5000 = $0.10 labor cost per part, not $500/1000 = $0.50 per part. If you then close the job with only those 1000 parts produced, you’ve only removed $0.10 * 1000 = $100 of labor cost from the job, leaving $400 in WIP when the job closes. That ends up becoming Mfg-Var.