The MFG-STK amount (from the Part Transaction History Tracker) divided by the number of units
Minus actual cost for one unit
The difference of these two lines is then multiplied by the number of units
And that product is what is we see in the usage variance.
For example:
Order #: 1807
The MFG-STK for one unit is:
Date
Type
Quantity
Job
Invty
Amount
Mtl Unit Cost
Lbr Unit Cost
Bur Unit Cost
Sub Unit Cost
2/26/2024 12:00:00 AM
MFG-STK
2
1807
TRUE
2142.26
801.1622
55.365
214.605
0
Minus actual cost for one unit is:
Quantity
Job
Amount
Mtl Unit Cost
Lbr Unit Cost
Bur Unit Cost
Actual cost of Job for 1 qty :
857.97
18.46
71.54
The difference of these two lines is then multiplied by the number of units:
MFG-STK Mtl Unit Cost
Lbr Unit Cost
Bur Unit Cost
Sub Unit Cost
801.1622
55.365
214.605
0
Actual cost -857.97 -18.46 -71.54 0
56.80 -36.91 -143.07 0
Number of units x 2 x 2 x2 x2
Total: 113.61 -73.82 -286.14 0
This amt. is posted in
the usage variance account.
My question is why is the MFG-STK amount used to calculate the usage variance balance? Is there a reason why the MFG-STK is used and not the estimated amount found in the Production Detail report?
The variance from what I have found is what is left in wip when the job is completed.
All material, labor, burden minus MFG-STK,NFG-CUS material, labor, burden anything left or added after the last MFG-STK,MFG-CUS is the variance.
Lots of our people thought job closing was the magical moment, but the last quantity issued to stock is the point in time we have found.
So the theory would be similar. Estimates are a benchmark, but have nothing to do with costing.
Actual costs on job then the MFG-STK puts the item on hand at standard. Any differences or late issues will be put to the variance account.
Because when the parts are moved from WIP to Inventory they have to have a cost associated with them. The WIP value of the part is whatever costs have accumulated during the manufacturing process, but the Inventory value is determined by the Cost Method. If the part is Standard costed, the difference between the WIP value and the Standard Cost is the variance.
Inventory values are NOT updated if additional costs are added to the job AFTER the MFG-STK transaction.
I have this BAQ which gives an estimation of what variance could be. Of course the only way to know for certain is to run the Inventory/WIP Reconciliation report.
Are you using Product Group? You could always enter the same accounts in the Variance lines. So no matter what happens, all costs go to the same account
When using standard costing, variances are normal. The idea is to manage/correct what is actually happening by analyzing the variances. It would be extremely rare to continually have zero variances. Operations don’t always take the exact time of the standard, sometimes you need a little more material, sometimes the material is purchased at a different cost, etc.
You could code the variance to the same accounts a actuals but you would then eliminate the tools to manage the business.
At the moment, all of the cost is going to MFG-VAR and is not distributed between the WIP accounts. Could you please advise what I can do so the cost is allocated to the appropriate WIP account?
As a reminder, when the JOB were opened, part number: XYZ had $0 in standard cost, after the job was closed, I updated the standard cost to what is listed now as the standard cost for this part. My question is, is there a way to update the JOB now that there is a standard cost, so the cost is allocated to the corresponding WIP account instead of all the cost going to MFG-VAR as it is now.
As the job is closed, you will need to use Job Adjustment as long as the transactions have not been posted to GL. If it has been posted to GL, you will need to do a correcting journal entry (although this will not update the job).
