Hello,
On a production order using standard costing method, we are noticing that variances are being miscalculated when you look at the different type of variance transactions from a Production Order (Capacity/Capacity Overhead/Material). Interestingly enough, the TOTAL variance is correct if you collapse the three variance transactions; but separately they are misleading and incorrect.
My assumption is that the FG Std Cost is compared against Total Actual Material Cost only, but since that Standard Cost already includes the other costs (cap/cap oh) then, the material variance computed was not the "true" material variance.
Since, variance in BC is based off the cost of the FG, maybe the way the variance calculations are done is good for BC algorithm with clearing the WIP & Interim inventory - it helps truing up the cost for the FG item.
Is there any setup that I should look at that would potentially solve this issue - setup that could show us the "true" variance per type on Prod Order?
Thanks a lot in advance.
