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Dynamics 365 Community / Forums / Microsoft Dynamics AX (Archived) / Lot size variance for ...
Microsoft Dynamics AX (Archived)

Lot size variance for fixed costs in a production order

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Posted on by Community Member

Hi everybody,

A production order of an item (standard cost) is posting variances during the cost price calculation. One specific variance is the lot size variance for fixed costs.

Does somebody know how this lot size variance for fixed costs is calculated?

Secondly, I don't understand why a lot size variance is calculated for a fixed cost. The lot size should be a variable that doesn't count for fixed cost, right?

Best regards,

Dirk

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  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at

    Hello DirkVDB,

    When you calculate the standard cost for a production item you have to make an assumption about the quantity in which the product is produced.

    This quantity has an influence on the materials required for producing your product.

    Yet, it also influences the production time for your machines & workers required.

    Very often you have some fixed costs included in those costs e.g. for preparing machines, and other things that do not depend on the quantity produced.

    Once you produce a different quantity than calculated you will see a lot size variance that basically reflects a fix cost degression effect as your fixed production costs get distributed over a smaller or larger production quantity.

    You can find some additional Information on the calculation of the lot size and other variances at this page: technet.microsoft.com/.../gg242850.aspx

    All the best,

    Ludwig

  • Community Member Profile Picture
    Community Member on at

    Hi Ludwig,

    thanks for your response.

    I fully understand your explanation, but I cannot recalculate the lot size variance of a fixed cost.

    I tried to recalculate the lot size variance using the planned quantity and the realized quantity, but I have no clue how AX calculated this.

    I think I have a look into the code with a developer in order to be able to recalculate the lot size variance of the fixed cost.

    Best regards,

    Dirk

  • Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at

    Hello Dirk, I would first try sitting down with a consultant specialized in production. I believe that both of you will find out how and what AX calculates without the help of a developer. All the best, Ludwig

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