How to deal with the Cost variance between the Average cost of the period and the Moving Average

[frey]

Dear all,

I done the process below:

1.The finished good is S001, the original cost is 0. Perpetual Cost Method is Moving Average

2.The raw materials are S002, S003, the original cost is 0 both. Perpetual Cost Method is Moving Average

3.Procure S002 , quantity is 2, net price is 10

4.Procure S003 , quantity is 2, net price is 20

5.Create Production Order 517, product 2 finished good S001, consume 2 S002,2 S003.

The resource S001 cost rate 20CNY/hour, consume 2 hours, so manufacturing overhead value is 40

6.Procure S002 , quantity is 3, net price is 20

7.Procure S003 , quantity is 3, net price is 40

8.Create Production Order 518, product 3 finished good S001, consume 3 S002,3 S003.

The resource S001 cost rate 20CNY/hour, consume 3 hours, so manufacturing overhead

value is 60

9.Procure S003 , quantity is 1, net price is 100

10.Inventory Valuation - WIP Clearing Production Orders 517,518

11.Create Journal Entry Vouchers ,Cost Centers - Line Items total value is 3000

12.Executed Inventory Valuation - Actual Cost Rollup

S001:

13.After I executed the Inventory Valuation - Actual Cost Allocation, system posted 2 journal entries automatically.

1) Journal Entry: 5000017

Debit: 67012000 - Inventory revaluation differences 2900

Credit: 51013000 - Production expenses -internal service 2900

2900=3000-100

2900 is the difference between the actual manufacturing overhead 3000 and the manufacturing overhead 100 which has been apportioned to the production order 517and 518 (40+60)

My question is the account 67012000 - Inventory revaluation differences is imbalance

3,296.67-2900=396.67

The difference 396.67 is the material S002 and S003 and the manufacturing overhead 100

396.67=32+86.67+48+130+100

　 517 518 　 Production Lots note Actual note Difference Production Lots note Actual note Difference material 　 　 　 　 　 　 　 　 　 　 S002 20 10*2 32 (10*2+20*3)/5*2 12 60 20*3 48 (10*2+20*3)/5*3 -12 S003 40 20*2 86.67 (20*2+40*3+100)/6*2 46.67 120 40*3 130 (20*2+40*3+100)/6*3 10 manufacturing overhead 40 20*2 1200 3000/5*2 1160 60 20*3 1800 3000/5*3 1740

How to deal with the difference?

FYI:

Report: Production Lots - Line Items

Regards,

Frey

[frey]

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