Microsoft Dynamics AX (Archived)

Standard Costing

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Posted on by lally

Hi All ,

In the inventory posting profiles -standard cost variance tab - we have the two fields as mentioned below.

* Inventory cost revaluation

* Cost change variance .

* Production cost variance

* Production Qty variance.

Could any one explain for what type of transactions posted in AX , the above accounts will effect in AX 2012 R2 ?

Thanks in advance.

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Brandon Wiese 17,788 on at

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Inventory cost revaluation occurs when activating a new standard cost for a Released product (that is different from the previous standard cost, of course).

Cost change variance occurs when transferring inventory between two Inventory sites with different standard costs, thus accounting for the loss or gain in inventory value as a result. Note that this also covers Inventory transfer orders.

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lally 8 on at

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Thanks for the reply ,

Please highlight about the rest of the two accounts .

* Production cost variance

* Production Qty variance.

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Brandon Wiese 17,788 on at

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When a production order is Ended, AX analyzes the actual production posting against the costs that were captured when the production order was estimated.

When a raw material used a different quantity than was estimated, that generates a Production quantity variance.

When a raw material used a different cost than was estimated, that generated a Production cost variance.

Note that you can have both even for the same raw material.

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lally 8 on at

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[quote user="Brandon Wiese"]When a raw material used a different cost than was estimated, that generated a Production cost variance.[/quote]

How does it happens ?

Normally system takes the cost from the active cost prices from , same will be moved to till end ?

How system would come to know cost price has been changed ,as for standard cost we not running the inventory closing batch job , this batch job only do the settlement between the receipts and issues then flow the actual cost to production order .

For standard cost materials , there is inventory closing conept , then how system would identify the actual or changed cost or which inventory transaction cost is picking to produce FG ?

Thanks in advance.

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Brandon Wiese 17,788 on at

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First of all, you can only get a Production quantity variance or a Production cost variance when the finished good is standard cost. If the finished good is actual cost, then the inventory value of the receipt equals the cost of the raw materials and direct and indirect costs, and there can be no variance.

Second, production orders take time. Between when a production order is estimated and ended, raw materials can change their cost. It can happen under FIFO, i.e. Purchase order receipt or invoice, and it can happen under standard cost, i.e. someone activates a new standard cost for the raw material.

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lally 8 on at

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[quote user="Brandon Wiese"]First of all, you can only get a Production quantity variance or a Production cost variance when the finished good is standard cost. [/quote]

How either qty variance or cost variance ?

Assume that Rawmaterial qty required 10 PCS @ $ 12 , raw material received and issued to production order , scenario like in vendor invoice cost price $ 15 and same cost to be flowed and second thing is this time raw material scrap goes much , so more qty required to produc FG.

In the above scneario both can occurs ....any help ?

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Ludwig Reinhard Microsoft Employee on at

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Hi lally,

Probably the following TechNet site, which provides some of the common sources of production related standard cost price variances helps answering your question

technet.microsoft.com/.../gg213654.aspx

Best regards,

Ludwig

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