3287228 - How are the Variances for Production Lots and Materials Calculated in Actual Costing

You execute the actual cost rollup run and notice the variances for the production lot and the output material are different, you want to know how the variances are calculated.

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To check the variance calculated for production:

1. Go to Inventory Valuation work center.
2. Go to Production Lot Actual Costing view.
3. Search Production Lot AAA(AAA is the ID of the production lot) and click View button.
4. Click View All.
5. You see the Variance is -123,11 LC (local currency)(see below example):

To check the variance calculated for the output material:

1. Go to Inventory Valuation work center.
2. Go to Material Actual Costing View.
3. Search Material BBBB(BBBB is the ID of the output material of production lot AAA) and click View button.
4. Click View All.
5. You see the Variance is -407,28 LC(see below example):

The formulas of variances calculated for production lot and output material are different.

• The actual cost and variance calculated at Production lot is based on the inputs and not the confirmation of the output product.
• In Material actual costing, the variance shown at production lot line also includes the output product confirmation and business transaction type show Goods receipt from production.

Below is the example of how variances are calculated for production lot and output material.

1. For production lot, the formula is Variance = Actual Input cost - (Sum of all Preliminary of input material + Sum of all Preliminary amount of Internal Service Confirmation + Sum of all Preliminary amount of Overheads).

(1)The production Lot Actual Costing, under tab 'Input Material', 'Services', and 'Overhead', you get the Actual Input cost = Sum of all (Goods Issue for Production) + Sum of all (Internal Service Confirmation) + Sum of all (Overheads) = (95,68+0,59+0,13+1,09+9,29+4.25+,35+57.53) + (57,50) + (0) = 226,41 LC

Input materials:

Services:

Overheads:

(2)The production Lot Actual Costing, under tab 'Input Material', 'Services', and 'Overhead', you get the (Sum of all Preliminary of input material + Sum of all Preliminary amount of Internal Service Confirmation + Sum of all Preliminary amount of Overheads) = (194,63 + 0,59 + 0,13 + 1,09 + 9,29 + 4,25 + 0,35 + 62,19 ) + ( 77,0) + (0)  = 349,52 LC

Input materials:

Service:

Overheads:

So the total variance = Actual Input cost – Sum of all Preliminary amount: 226,41 – 349,52 = -123,11 LC

2. For output material, the formula is Variance = Actual Input cost – Preliminary amount of output confirmation.

In the Material Actual Costing, under tab Material Items, the result is the actual input cost which the preliminary amount is preliminary amount of output confirmation.

So, the total variance of the material = 226,41 - 633,69 = -407,28 LC.

production lot; material; actual costing variance. , KBA , SRD-FIN-INV , Inventory , How To