Variance Cost when closed Production Order

[Former Member]

Hello B1 Expert, we has issue when closed production order (SAP B1 9.1 PL 5).

We has Production Order , The Parent Product Inventory Valuation is 'STANDARD COST' and the Material is 'MOVING AVERAGE'

> Production Order Information

   - Actual By-Product Cost : 10,122,702.80

   - Actual Item Component Cost : 8,670,381.38

    Total Variance : 1,452,321.42

     When closed the production order, not only WIP variance but also Variance Cost of Finished Product are created.

     Why this is happen ?? As we know when closed the production order, the journal only to settle the WIP clearing become 0.

     on above case The Ideal Journal is :

      WIP Clearing (Debit) : 1,452,321.42

           WIP Variance (Credit) : 1,452,321.42

    But Current conditions account journal are created :

      WIP Clearing (Debit) : 1,452,321.42

           WIP Variance (Credit) : 1,452,321.42

      Variance Cost (Debit) : 100

            Finished Goods  (Credit) : 100

      Why this is happen ?? thanks

[frank_wang6]

since u r using std cost on parent, and avg on material. The variance is obvious since ur parent cost will be different from the avg add-up from material.

The difference will be posted into variance.

WIP is just a temp space to allow u describe the status when parent is not done, and and material is issued.

So if u think ur transaction is done in a single step, material disappear from inventory, and finish good appear in inventory at the same time.

std cost of parent - sum of material's avg = variance.

This is something u can not avoid since u r using different cost method.

Frank

[Former Member]

@Frank Wang, thanks for your replay.

Yes we know that, my questions focus on why system make journal for Finished Goods, it's such as if we entry the unit cost which is difference with standard cost.

See amount 100 on the journal bellow . We see on audit report there is no unit cost difference with standard cost.

The Ideal Journal is :

      WIP Clearing (Debit) : 1,452,321.42

           WIP Variance (Credit) : 1,452,321.42

    But Current conditions account journal are created :

      WIP Clearing (Debit) : 1,452,321.42

           WIP Variance (Credit) : 1,452,321.42

      Variance Cost (Debit) : 100

            Finished Goods  (Credit) : 100

[frank_wang6]

No, ur ideal journal is wrong.

Say ur std cost of finish good is $100, and sum of material avg is $80, the correct journal should be

When material issue

inventory credit $80, WIP debit $80

when WO complete

inventory debit $100, WIP credit $80, and Variance credit $20

Frank

[Former Member]

@Frank Wang,

We think, we worry you don't understand my questions. On this replay we attach the picture.

Inventory method is standard cost, there is no changes of standard cost. Why the Journal  for 0.05 is created?? thanks

[frank_wang6]

u r right, i probably misunderstood at the beginning.

Is that possible can post G/L screen for each transaction on this WO? Only the last one doesnt help too much.

Frank

[Former Member]

it's ok Thanks Frank, If we found the resolutions we will share