I am an accountant and we used standard cost. If I am understanding your question, you want to include labor (capacity) and overhead costs in your standard, but not actually record runtimes in production, only actual material quantities. You are currently seeing large capacity and overhead variances in your general ledger and you only want to see material variances.
We have a similar issue where we have included capacity and overhead in our rates but at the time production is having difficulties entering runtimes in the system. This is creating large capacity and overhead variances, even though technically none would exist.
In our case, we changed our inventory posting setup and general posting setup (for production), to be the same g/l account (I would use a separate one from your g/l material variance account).
In Inventory Posting Setup, the fields are Capacity Variance account, capacity overhead account and manufacturing overhead account.
In General Posting Setup (on your production line), the accounts are Direct Cost Applied and Overhead Applied account.
Direct Cost Applied account should be the same Capacity Variance account on Inv Posting Setup
Overhead Applied account should be the same as Capacity overhead/Manufacturing overhead
account in Inventory Posting Setup
You will still see large labor/overhead variances showing up on Production Variance reports, but they should (for the most part) offset each other on the g/l variances account. I would not assign the Material Variance g/l account to any of these accounts above.
I hope I understood your question and this helps you out.
