Skip to Content
author's profile photo Former Member
Former Member

Variance is Getting Credited to COGM Expense Account

Hi,

While doing the Production process, we got 15$ variance due to the variance between Goods Receipt and Goods Issue. When i settle the production order, The above 15$ is getting debited to Variance account and posting to COPA and the is getting credited to Material COGM - Expense Account. But not going to COPA.

The above process is correct? But why is is not posting to COPA. How it will goto COPA?

Thanks

Fit for Nothing

Add a comment
10|10000 characters needed characters exceeded

Assigned Tags

Related questions

2 Answers

  • Posted on Dec 17, 2010 at 07:00 AM

    Hi ,

    Consumption Expenses doesnot flow to COPA from the FI /CO entry ..( Goods Issue/Variance entries)..

    Product Cost Expenses flow to COPA at the time of sales ( Billing).. as COPA taken COGS .. not COGM..It is done with a configuration in COPA using Cost Key maping..

    Hence , during consumption and variance entry.. COPA will not be affected for the consumtion..Variances are only taken to COPA.. which is happening correctly in your system..

    Regards

    Sarada

    Add a comment
    10|10000 characters needed characters exceeded

  • Posted on Dec 17, 2010 at 08:02 AM

    Hi

    The prod order is a temporary object created for the purpose of manufacturing a specific lot size of a given product

    Debits like Raw Material And Activity confirmations post to the production order - Say, 105 USD

    Credits like Goods receipt - Posted to the production order - Say 100 USD

    In order to close the Production order, you must post the balance (variance) 5 USD also to the production order... And the account is COGM i.e. offsetting account for GR or Settlements pertaining to production order...

    .... Thats the precise reason why variance is posted to COGM account and to the production order and not COPA...

    COPA will be posted to once you sell this stuff which you have manufactured from the production order

    Regards

    Ajay M

    Add a comment
    10|10000 characters needed characters exceeded

Before answering

You should only submit an answer when you are proposing a solution to the poster's problem. If you want the poster to clarify the question or provide more information, please leave a comment instead, requesting additional details. When answering, please include specifics, such as step-by-step instructions, context for the solution, and links to useful resources. Also, please make sure that you answer complies with our Rules of Engagement.
You must be Logged in to submit an answer.

Up to 10 attachments (including images) can be used with a maximum of 1.0 MB each and 10.5 MB total.