MFG Variance Reporting

Need advice on how and when to run Mfg variance account (R31804). Looking for a clear difinition of what is a: Engineering varaince, Planned varaince, Actual variance, Other variance.

What happens if I change the F4105 cost for either a component or end item and not re-roll cost will I get a varaince.

Can I rerun variance accouting each time I run Manufacturing accounting (R31802)

Engineering Variance: due to changes on bill of materials or routings =
since
last roll up
Planned Variance: due to chages manually made to the work order's parts =
list
or routing
Actual Variance: due to a difference between actual cost and standard =
cost
Other Variance: when the order quantity differs from the workorder =
completed
quantity.

DO NOT CHANGE THE F4105 COST and not re-roll the cost. You will not =
only get
a variance, you will get an integrity issue between the cardex and the
inventory valuation (F0911).

You can run Variance accounting in final mode only once, so you have to =
make
sure all materials and hours have been properly reported and accounted =
by
R31802.

Regards,

Jorge

R31804 creates journal entries for work order variances. It can be run only once for each work order, after ALL transactions have been entered for the WO. R31802, on the other hand, can be run as many times as necessary for a given WO.

A brief explanation of the variances:
Engineering variance captures the differences by cost component between the frozen standard for the item and the parts list and routing at the time they were attached to the WO. Typically represents a design change to the item.
Planned variance captures the difference between the parts list and routing at the time they were attached to the WO and the WO parts list and routing at the time R31802 is run. This typically would be "one-time" changes, such as a component substitution, or alternate process step.
Actual variance captures the difference between actual material and time expended on the WO and that which is defined in the WO parts list and routing.
Other variance captures differences created due to rounding, freezing standard costs while open WOs exist, and over- or under-completing a WO.

Hope this helps.

Variance accounting should only be run when the work order is fully completed and ready to be closed. However, you can use proof mode to view variances without closing the order. Once R31804 is run in final mode, records are written to the F3102T file which are where the variance amounts are held for each. In the F4801, the WAPPFG (variance flag) field is populated with "3".

The reason you would not want to run this object in final mode repetitively is because the associated variance accounts are updated for the purpose of closing out left over balances in WIP due to differences in standard and actual costs.

In my experience in a standard cost environment, I would never change the cost ledger value to be different from the frozen cost. Changing the F4105 value manually will have the effect of restating the cost on the item with out revaluing all existing inventory. This could lead to your perpetual inventory value getting out of synch with your G/L. Using an item with such a difference would result in a Sys Var-Other.

FYI, look on the knowledge garden for a spreadsheet that outlines all of these variances and how they are created. You can also download the Manufacturing Accouting and Product Costing online documentation that is somewhat useful.