Microsoft Dynamics AX (Archived)

Production order variances

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Posted on by Community Member

Hi There

Is there anyone knows when the production variance accounts are used in the production process.

Main accounts in the item group as below:

Lot size variance
Production quantity variance
Production price variance
Production substitution variance

Here i found the specification from Microsoft: http://technet.microsoft.com/en-us/library/gg242850.aspx

But i'm still not quite sure when they will be used, anyone can share a sample to me ?

many thanks.

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Guy Terry 28,924 Moderator on at

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Hi,

Your link says 'Production variances are calculated after you end a production order for a standard cost item.'

So the 'When are they used' is 'When the production order is ended'.

But, they will only be used on standard costed items. I assume that means the produced item is standard costed. As I recall, you were using FIFO costed items, which could explain if you're not seeing these postings.

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Community Member on at

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[quote user="GuyUK"]

Hi,

Your link says 'Production variances are calculated after you end a production order for a standard cost item.'

So the 'When are they used' is 'When the production order is ended'.

But, they will only be used on standard costed items. I assume that means the produced item is standard costed. As I recall, you were using FIFO costed items, which could explain if you're not seeing these postings.

[/quote]

Hi Guy

Thanks for you reply, i'm surprised you still remember that i'm using the FIFO, that's true. But i just wanted to know the the how the standard cost is calculated if there is a variance. I cannot find any book/white paper details this.

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Weaveriski 23,620 Moderator on at

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It all starts with the estimation and then creation of the standard cost in the costing version. As an example in the estimation you would define the "standard" quantity this will be manufactured in, and this is considered the lot size and then any difference the system attributes to the lot variance, so lets say you have a calculated cost based upon a quantity of 10, the setup costs and indirects are apportioned based upon this, then raise a production order for 8, and complete 8 but it takes longer, I believe elements of this are then posted to the lot size variance because it attributes this variance to the fact you did not make the 10.

The others depend upon different BOM consumption quantities from estimated, using different items in the production BOM and where the actual cost of an item is not the cost of the component used in the variance.

Basically you have a standard cost - AX will post this as the inventory value, all differences from this to the production order will need to be allocated as variance, and therefore the variance depends upon what causes the difference from standard and then it gets apportioned. Make sure you item is standard and then create orders with basic variances and then track it.

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[quote user="Weaveriski"]

It all starts with the estimation and then creation of the standard cost in the costing version. As an example in the estimation you would define the "standard" quantity this will be manufactured in, and this is considered the lot size and then any difference the system attributes to the lot variance, so lets say you have a calculated cost based upon a quantity of 10, the setup costs and indirects are apportioned based upon this, then raise a production order for 8, and complete 8 but it takes longer, I believe elements of this are then posted to the lot size variance because it attributes this variance to the fact you did not make the 10.

The others depend upon different BOM consumption quantities from estimated, using different items in the production BOM and where the actual cost of an item is not the cost of the component used in the variance.

Basically you have a standard cost - AX will post this as the inventory value, all differences from this to the production order will need to be allocated as variance, and therefore the variance depends upon what causes the difference from standard and then it gets apportioned. Make sure you item is standard and then create orders with basic variances and then track it.

[/quote]

Hi Steven

one more question(just wanted to double check), if i use other cost such as "FIFO" or "Running Average" instead of "Standard cost", does it mean main accounts configured as

Lot size variance

Production quantity variance

Production price variance

Production substitution variance

They will not be used in the manufacturing process ?

many thanks.

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Community Member on at

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Hi,

Can any one explain it with the help of Accounting entries and scenarios it will be beneficial

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WilliamHerrera 5 on at

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I have a problem with posting variance of a production order ended, the problem is that the variance of a production order is not correct with respect to the production order, that is, the posting sees the variance summed to other indirect cost for example. What is the root of this problem???

thank you in advance,

William

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