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Dynamics 365 Community / Forums / Microsoft Dynamics AX (Archived) / Production Costing Jou...
Microsoft Dynamics AX (Archived)

Production Costing Journal

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Posted on by Community Member

Dear all Expert,

I have basic question related with production costing.

Currently I have been able to run production from Estimate to End.

However I have several questions related with the posting journal:

1. When production order is end, variance only generated as expenses account. However total amount in the finished goods (inventory) is only posted with the planning order amount. For example planning order based on price calculation is 2000, while actual cost (still based on standard cost is 3000). Total amount in the invenotry ledger is only 2000. While it should be 3000. Can I include this variance to my total finished goods amount?

2. For example I have machine A which I used as route consumption. its actual cost such as for fuel, maintenance, rent, etc is 5000, while in standard costing I only used 3000. Then total cost in my machine (I put as resource financial dimension) is + 2000. Can I also include this variance to the total amount of finished goods inventory? So my finished goods cost will reflect the actual cost.

I have try backflush costing for this scenario, as I read that this should flush all variance cost to the end of product. But there is no transaction or ledger is posted in this transaction.

 

Please help if anyone know about this process.

 

Many thanks,

M.H.

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  • Suggested answer
    Community Member Profile Picture
    Community Member on at

    are you using standard cost in your company? if yes, inventory value is based on standard, not including variance.

  • Community Member Profile Picture
    Community Member on at

    Hi Sabrina,

    Yes I use standard costing.

    Btw usually in other system although in daily posting only based on standard. However in the end of the month when I use inventory closing (material ledger closing). all variance will be posted as additional value in inventory or COGS (if product have been sold).

    Can AX do the same?

  • Weaveriski Profile Picture
    Weaveriski 23,620 Moderator on at

    You want your actual costs to be included in your final inventory cost, but are using standard costing. It would seem to me that you are using the wrong costing approach based upon your requirement.

  • Community Member Profile Picture
    Community Member on at

    Hi M,

    if you are using standard cost to evaluate your inventory, you shouldn't add the production variance to the ending inventory after production. Once the work order is closed and ended Production variance(including material usage, labor and OH) will goes to variance GL account, which are shown in P&L. Your inventory value will be always based on standard cost no matter how the variance goes. if production variance is always favorable/unfavorable, you may need to consider update your standard cost to match the reality.

    hope it helps

    Sabrina

     

  • Community Member Profile Picture
    Community Member on at

    Hi Sabrina,

    Then you mean that I can only display the inventory value as standard cost?

    Then to look whether my production is favorable/unfavorable I can take a look on the variance report?

  • Community Member Profile Picture
    Community Member on at

    Hi Steve,

    Do you have any article or source that I could read about the other production costing approach?

    Because as I said previously, I usually use the standard costing to calculate my production. But in the end of month there will be material ledger closing process which will absorbed all variance from production into inventory value or COGM or COGS (depends on the stage of production). And this posting will be automatically reversed in the next month (1st date).

  • Weaveriski Profile Picture
    Weaveriski 23,620 Moderator on at

    No I have nothing specific, you can search for elements online but that is all.

    The variance is per receipt ultimately. The consumption of the child at standard creates no variance in essence unless it is a quantity one. You would need to write a report looking at the child production related to try and pull this together to get what you want.  

  • Community Member Profile Picture
    Community Member on at

    Yes, if set up is correct, every work order will generate a variance amount. The amount will go to GL accounts in P&L, it is part of your total COGS. You can access to variance report via: Production control>Reports>analysis>cost estimates and costing.

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