Skip to Content

Production Order Variance - Journal Entry to WIP Inventory Variance Account

Dec 07, 2016 at 08:26 PM


avatar image
Former Member

Hey Experts,

When there is a variance between the planned quantity of a component item and the manually issued quantity, a journal entry is created after the production order's status is changed to "closed". This journal entry does four things: 1) Credits the WIP Inventory Account, 2) Debits the WIP Inventory Variance Account, 3) Credits the WIP Inventory Variance Account, and 4) Debits the regular Inventory Account of finished goods.

In my scenario I have set the WIP Inventory Variance Account to a Shirk/Variance/Scrap gl account and want the JE to only do items 1 and 2 from above and stay in the Shirk/Variance/Scrap account. For some reason it treats it like a clearing account and moves the cost back out of the Shrink/Variance/Scrap gl account and back into the regular Inventory Account.

Is there a configuration to have this variance amount stay in the WIP Inventory Variance Account? Or can you better explain why it is moving the amount back out of this account?

To me it would make since that if scrap was used in a production order and we issued more of a component item to the production order, the difference in the amount from the Receipt from Production and Issue for Production would go to WIP Inventory Variance Account.


image1.jpg (74.2 kB)
image2.jpg (59.5 kB)
image3.jpg (75.2 kB)
image4.jpg (79.8 kB)
image5.jpg (115.4 kB)
10 |10000 characters needed characters left characters exceeded
Former Member


I have the same question.. Did you find the solution for this?

* Please Login or Register to Answer, Follow or Comment.

0 Answers