Can someone explain the calculation logic of Manufacturing Material Variance (MFG-VAR)?
Our company uses STD cost. I’m creating a BAQ that displays the details of (MFG-VAR), but no matter how I combine them, the amounts listed in the accounting standard report don’t appear.
My output logic is as follows:
Output materials from the method tracker and multiply the STD of each material to obtain the actual material cost of a finished product. Then, multiply the output by the production volume to obtain the total standard manufacturing cost.
In a job, multiply the IssuedQty of raw materials by STD to obtain the total material cost for the job.
Subtract 2 from 1 above and calculate the variance.
What’s wrong that’s causing the difference between the standard report and the variance report? Or am I looking at the wrong table?
Not an expert however MFG-VAR is not only a material variance but a total job variance essentially the total amount of cost put into a job were not pulled out when the finished items were issued to the customer or to inventory.
Its often a timing issue some of the most common reasons for this in our environment is someone clocks on after the Manufactured receipt entered, or the cost of the subcontract PO receipt is changed after the Mfg receipt entered, or material is scrapped during the job.
Our BAQ to look at what is stuck in WIP which will end up as an MFG-VAR has JobHead at the top level, summarise to job number SubQuerys on JobAsmbl which calculates the actual total Job cost sum(JobAsmbl.TLALaborCost+JobAsmbl.TLABurdenCost+JobAsmbl.TLAMaterialCost+JobAsmbl.TLASubcontractCost+JobAsmbl.TLAMtlBurCost)
and Second subquery on PartTran to calculate the costs relieved, filter PartTran to tran type MFG-CUS,MFG-STK,MFG-WIP to calculate the relieved costs sum(PartTran.ExtCost). The difference between the actual cost and what was relieved is your MFG-VAR
This seems to work for us ymmv I got the logic for it from an ancient post here which I cannot seem to find now. Running your WIP Recon report on a few of the jobs that have a variance should give you some insight into what is causing it.
Thank you for sharing your knowledge. Thanks to you, I learned about the structure of manufacturing variance and changed my logic.
(FG STD cost * Qty) - (Issued Qty in Job Raw materials * STD cost)
By doing this, most jobs produced values identical to the variances in the standard accounting reports. In the accounting report, the variances on the credit side yielded almost identical values. However, the items on the debit side still do not match in value. Perhaps the debit entry is due to the date difference you mentioned.
The BAQ you suggested above seems to be the one in the Part transaction tracker, right? I’m planning to share this report with the production team. Rather than simply reporting the amount in the part transaction tracker, I want to show them that these variances are occurring because they’ve actually issued raw materials in their jobs.
Could you give me some advice for this purpose?