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Dynamics 365 Community / Forums / Supply chain | Supply Chain Management, Commerce / Variance created on pr...
Supply chain | Supply Chain Management, Commerce
Suggested Answer

Variance created on production order.

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Posted on by CU19121606-0 2

Hi Everyone,

I’ve been testing the variance issue in production orders on the STG environment using the item set to moving average costing. I’ve replicated all the scenarios shared with me by the end user and have attached them for your review.

Despite attempting the same scenario 20 times, I’ve only managed to create a variance once, and I’m unable to replicate it. Please review the attached scenarios and provide guidance on the following:

  1. How can we reliably create a difference between manufacturing cost and manufacturing cost, WIP?
  2. How can we identify when this issue is likely to arise?
  3. What steps can we take to manage and mitigate this scenario effectively?
  4. How can we create this scenario deliberately ?

Your assistance in resolving this matter will be greatly appreciated.

Production PPV qu...
Categories:
Dynamics 365 Supply Chain Management
I have the same question (0)
  • Dogan Adiyaman Profile Picture
    Dogan Adiyaman 698 User Group Leader on at
    We don't have enough info to answer the question but I am going to do some assumptions.
    • Under Moving Average Costing, the total actual cost incurred in WIP is directly transferred to the Finished Goods Inventory.
    • There are no variances, as the Moving Average Cost dynamically adjusts to reflect actual production costs.
    • Once production is completed, all costs move from WIP to Finished Goods Inventory, and the difference disappears. This is unlike Standard Costing, where variances might create lasting differences.
     
     
  • Suggested answer
    Fasih Profile Picture
    Fasih 416 on at
    Hi,
     
    Usually moving average items face no variances in production process. But for the sake of understanding we can look at the issue in following manner.
    In the business terms, WIP account heads are used to report the items which are part of the ongoing and unfinished production processes when you have to close the instance, event, day, week, month or even a Fiscal year. So any changes occurring during the production processes can make direct impact on WIP accounts.
    The variance you described is likely to arise whenever there is Price changes, delays in posting, and incorrect overhead absorption.
    Timely cost posting, regular WIP reconciliation, and monitoring material prices are key to avoiding this issue.
    You can test with fluctuating prices and delayed/early posting to trigger the variance.

    Hope all the queries are clear.
     
    Regards

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