Production order and Variance

Hi,

I need some clarifictions on production order settlement and variance.

Our PP consultant created one PO.Before release of PO they took standard cost estimate it is showing 9000. In this stnadard cost estimate we are calculating the scrap credit also and scrap credit 1000 and we are mainting for cost center also for scrap credit.

while doing of production of settlement we saw that actual amount is 11000.

As per my knowledge When the production order settlement scrap debit also should settle to scrap cost center. Then our scrap cost center will be 0. But everything is settle except scrap and it is not giving any error also. My doubt is whether scrap is settled or does it was clubbed to any other receiver.

One more question. Why we have to settle the order and why we have to run the variance for order. Does it provides any advantage to the management.

Please guide me deeply.

It is very urgent for me.

Thanks in advance