Hi All,
I have a problem I can't get my head around, which is that i am getting manufacturing variances months after the fact.
We are running standard cost. description of what is happening below.
1. We purchase some stock in July, @ standard cost of 5.98 per unit
2. We produce finished goods stock backflushing the purchased item
3. We close the production order, generating zero variance
4. We change the standard of the purchased item as part of a standard cost review in August to 6.90 per unit (and roll up the finished item)
5. We invoice the purchase item in September
6. The system generates a manufacturing variance for the July production and posts it in september
the variance that is posted is the difference between the original standard of 5.98 and the new standard of 6.9 (0.92 per unit).
what i dont understand is why it is doing it, the invoice may well generate PPV if it differs from standard, but why is the system going backwards in time to post variances against a production that finished 2 months ago for product we have already sold? I'd expect if the product is still in stock that a revaluation journal would increase the cost of the finished goods, but at the time the standard COG was 5.98 and it should remain 5.98.
I kind of understand what its doing, i just don't understand the logic of it.
any insight would be appreciated
