A question on Manufacturing & Variance Accounting

[kapsekunal]

Hi,

In a work order for a parent item X, I would like to know if costs of the some components of x are changed as per below two scenarios:-
1. cost change Before running the manufacturing accounting
2. cost change After running the manufacturing accounting

Will there be any variance in above two scenarios? if yes then where it will be captured?

Please note that after the cost change of the components we are not simulating and freezing the cost for the parent item X.
Also we are not invoking WIP revaluation from anywhere.

For Ex:

Parent item- X, forzen cost 50 usd
Components unit costs:
A- 5usd per
B- 7 usd
C- 10 usd

Now before or after running the manufacturing accounting for the WO for parent X we have components costs as
A- 6 usd
B- 7usd
C-8 usd

If cost changes are before running manufacturing accounting and variance accoutning then what will happen?

If cost changes are after running the manufacturing accounting and then we run the variance accounting then what will happen?





Thanks & Regards,
Kunal Kapse

 

[RussellCodlin]

Have you tested it to find out what the impact is? My assumption, without going through it, would be that in scenario 1 you would get manufacturing variance journals as your frozen A1 cost would vary from your actual A1 cost due to the changes in frozen cost of the ingredients. In scenario 2 you'd likely see no variances. These are assumptions only and the only way to confirm is to run through the scenarios.

I assume the question is about variance accounting and not about Planned vs Engineering vs Actual variances.