Skip to Content
Former Member
Apr 17, 2018 at 02:34 PM

Variance Calculation and Analysis - Material Ledger


Dear Expert,

I have query related to Variance Calculation during production.

For Eg I have one FG Goods with Order qty is 100 Pc and one child component with requirement qty in the order is 100 pc.

I have created an order in which I got yield only 80 out out of 100 Pc (Order qty) and consumed all 100 Pc of child components.

System is giving variance Planned cost and Actual cost and give variance and on order settlement system park this Variance in price Difference Account.

As far as I know in material Ledger system consider this Price difference and on Month end settle this Price difference on the available material Inventory and Revaluate std price of the material. Kindly let know Is My understanding correct or Not if Not please tell me the correct process on this.

My another question on this also is I produced only 80 Pc and do GRN of 80 Pc also Inventory also hit with 80 Pc also.Till Variance is okay that system is showing difference between planned and actual but when this variance is parked in price difference and this price difference is revaluating std price of the material. Without taking inventory of short 20 PC system is loading the price on the produced inventory, This is not understanbale

same is the concern with the raw material also, If planned 100 Pc and consumed only 80 PC and system is showing variance and parking this variance in Price difference account after order settlement and later load the variance ( parked in Price dfference account) onto the FG material. without consuming the raw material goods paying the price on revaluting the Price of the FG material, This is also not understandable.

Thanks in advance.