WIP Variance Account - SFC

[crystalreporting]

Hi,

Up until a month ago, we had our WIP Variance account set to the same account number as the IM Asset account. To better understand what transacations were going where, we changed the WIP Variance account to a unique account. Now we're seeing huge credits ($16K for a single shop order) hitting this account. What circumstances on a normal SFC order would post transactions to the WIP Variance account? We've reviewed the shop orders in question and can see nothing unusual or different about them i.e. no over-reporting. Also, would changing the WIP Variance account number while SFC orders are open cause this? Thanks!

Peter Shirley

http://www.linkcorp.com

 

[dgillz]

Wip Variance is the reported production at Std Cost less the reported consumption of components at std cost and the reported labor at actual cost. So several things could be causing this:

* Underconsumption of components. Q: are you backflushing or using Material Issues?

* Under reporting or not reporting labor.

* a Standard Cost of the parent item that, for whatever reason, is more than the standard cost of the components and the costed routing are. Q: How long has it been since the costs were rolled up?

On the final question, I do not believe changing the WIP Variance account on an open SFC order would affect this. No entry is made to WIP variance at all until the SFC Order is closed, and then when that happens, Macola looks up the WIP variance account and writes the records to the distribution file.

Software Sales, Training, Implementation and Support for Exact Macola, eSynergy, and Crystal Reports

http://www.trianglepartners.com

 

[crystalreporting]

Thanks for the response - after testing this, I've established that the WIP Variance account is only being hit when the activity transactions are posted in MCA. By purging the distribution file after each step, I can see that WIP Variance is not hit at all, until this step. When the activity transactions are posted, I get a credit to WIP Variance of $23K, and a debit to WIP of $23K. In a perfect world, what transactions should I see at this point? Also, the routings are setup so that there is only one operation - with a Y count point (just in case this has any affect).

Peter Shirley

http://www.linkcorp.com

 

[dgillz]

My fault, I assumed you knew that you must post activity transactions. You can post activity transactions all day long and it will still not affect WIP variance unless the SFC order is closed.

As far as the variance, are they backflushing material or using material issue to record comsumption of components?

Software Sales, Training, Implementation and Support for Exact Macola, eSynergy, and Crystal Reports

http://www.trianglepartners.com

 

[TLeaders]

As odd as it sounds I think you need to check the quantity on hand for the finished goods item, also this is behaving like an average cost environment.
Here is why: In a standard code environment both the wip and the wip variance amounts should be the same value (unless quantities were reported complete at the same time the order was closed). In an average cost environment when you close a shop order the system will attempt to recalculate the average cost of the finished goods item. If the quantity on hand in inventory is greater than the quantity produced on the shop order the total amount of wip will be added to the inventory and there will be little or no wip variance.
If the inventory quantity is less than what was produced on this shop order then the program assumes that all the inventory was produced on this order. So the average cost of this shop order becomes the new inventory average cost. Macola could give you the actual equations, I don’t have them anymore.
This assumes that the inventory was sold before correct average cost could be calculated – so wip variance should be applied to COGS.
If you actually are running standard cost, rerun Cost Buildup for these items. They may be in error.

Let me know if I missed something.
Tom