Does anyone know if Epicor offers some kind of a crash course on manufacturing variances (Purge WIP to Variance items) answering questions such as, what are the exact reasons they occur, their significance and how understanding why they happen and how troubleshooting them can help a business for example. Any help would be greatly appreciated.
Epicor may have something for you, you should ask your customer account manager.
I have a consultant that may be able to help you, she has taught me in this fashion many times before.
Let me know if you would like her contact info and I can message you.
1 Like
@SerenaR Not aware of a crash course, but have been battling this for us for the last couple of months.
In our case anything that is added to a job after the final receipt to inventory or shipment goes to variance and is therefore not a cost on the sales gross margin report.
We started with material late to get issued and solved that with just a couple of beatings. 
End Activity on an operation after the final receipt to inventory is a variance.
DMR-MTL or job material sent to inspection and sent back to the job after the final receipt to inventory is a variance.
I printed the WIP Recon this weekend for only the MFG-VAR transaction type and used job tracker to find all of the causes for us over $20 so we can review what actions we can take to prevent them if possible.
2 Likes
This is all great information, thank you very, very much! I take some relief in knowing that I am not the only one working to get a better grasp on understanding these variances.
2 Likes
This can be influenced by what type of costing system you use and how labor is applied to jobs.
we are on standard costing. So generally speaking, all variances are caused by a difference between standard cost of the item and the value of material and labor issued to the job.
It can be caused by a rework job, where rather than issuing the MOM to the job to make something, you issued the finished widget and add more labor and materials to it.
It can be caused by standard cost changes, where the material and/or labor issued to the job is at the old standard, but received to inventory at the new standard. (this is a common issue for us due to slow moving WIP).
It can be caused by the mfg eng team modifying a routing that changes the labor content/steps but neglects to inform the cost accountant to update the standard.
It will also be influenced by how you used labor to assign the cost. For example, whether the labor steps are quantity only, or whether they are time and quantity.
For items on a last cost or lot costed basis, material being issued after the job has already been wip-to-wip moved to the next job. Or really any job where materials are issued after job is closed and received to inventory or after job has shipped.
I always start with the production detail report to see actual cost of matl/labor/burden and compare on a unit cost basis to standard. Then I know whether I have a material vs labor problem, and can then look for whether its a cost problem or a quantity problem. Or in fun times, 7 variables all influencing the issue.
2 Likes
This is a lot of great information. Thank you very much for taking the time to send all this extra insight; I will use it to dig in!!