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Variance Cost when closed Production Order

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

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1 Answer

  • Nov 01, 2015 at 04:16 AM

    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

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