All variances posted in Production Substitution Variance

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Posted on by Satya Kejriwal

210 User Group Leader

Hi Friends,

I have a scenario when all the variances during production ending are posted into the posting type 'Production Substitution Variance'.

Details:

1. The finished goods produced are 'Standard Costing'

2. Raw Material is 'FIFO'

Scenario-

a. While posting picking journals for the production order, I am changing the quantity picked and also adding a new raw material for picking. Ideally, it should create Quantity Variance and substitution variance respectively.

b. Even if there is no change in the picking journals, the standard price of the FG is always higher than the FIFO cost of raw material. This difference is also posted in 'substitution variance'.

When I am searching on the web, everybody has explained the scenario when FG and RM both are on standard costing and all the variances work in that case (though I have not tried that).

Can anyone of you please help if I missed out any setup?

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Cam Phung 997 on at

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Hi Satya Kejriwal,

Do you setup co-by product in formula. Do you setup surcharge cost in costing sheet.

You should go to journal tab > picking list, route card, Route consumption in production posting to check whether another transaction occur except standard transaction. Substitution variance also occur at my test although I post all transaction according standard. This account occur when I setup by-product with cost allocation is percent.

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Satya Kejriwal 210 User Group Leader on at

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I am not having any by-product or co-product in my formula.

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Brandon Wiese 17,788 on at

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I have seen this happen when the standard cost on the finished released product was activated manually instead of calculated using the BOM and Route attached. When a production order is ended, the consumption of all materials and resources is compared to the cost sheet breakdown attached to the activated standard cost of the finished released product. If there is no cost sheet breakdown, i.e. the standard cost was assigned manually, then everything is a substitution.

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JacksNZ on at

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This is a very helpful suggestion and for me, this resolved the issue, thanks

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