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Understanding Variances in WIP Costing (文档 ID 1529756.1) |
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In this Document
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References |
Applies to:
Oracle Cost ManagementInformation in this document applies to any platform.
Purpose
Understanding Different Types of Variance Transactions in WIP Costing
Scope
This document shows the different types of WIP Variance transactions that are generated in WIP Costing with an example for each of the scenarios
Details
? Types of WIP Variance Transactions
- Final Completion Variance - This gets generated at the time of completing the job when the net activity is negative and WIP Assembly Completion happens with the Final Completion flag checked. Final Completion Variance can happen for Average/FIFO/LIFO Costing methods.
- Period Close Variance - This gets generated at the time of closing the period when there is net activity for a Non-standard expense job. Period Close Variance and Job close variance can happen for any costing method.
- Job Close Variance - This gets generated at the time of closing the job for the difference between Cost Incurred and Cost Relieved. Job Close Variance can occur under variance scenarios. Some of them are applicable for all costing methods while others are specific to certain costing methods.
? Different Scenarios leading to Job Close Variance
Scenario 1: Component cost changes
This scenario is applicable for all costing methods
Under Average/FIFO/LIFO Costing methods, it occurs there is a change in component cost between WIP Component Issue and WIP Component Return.
Under Standard Costing method, it occurs when there is a change in component cost but cost rollup is not performed for the assembly having this component.
Scenario 2: Components issued for dummy Operation
This scenario is applicable for Average/FIFO/LIFO Costing methods. It occurs if component is first issued to a dummy operation and then an operation is added to the job.
Under Standard Costing method, it occurs when you add a component or resource which is not aprt of the BOM/Routing to material requirement of the job and issue it
Scenario 3: WIP Assembly Scrap transaction
This scenario is applicable for all costing methods. For more information on WIP Assembly Scrap and its accounting, refer Doc ID: 550249.1
Scenario 4: Components issued after completion is performed with Final completion flag checked
This scenario is applicable for Average/FIFO/LIFO Costing methods.
Scenario 5: Under issue/ Over issue of components
This scenario is applicable for all costing methods. When the standard requirement is not met, the Cost Incurred does not equal the Cost Relieved.
The only exception is when Final Completion flag is checked for Average/FIFO/LIFO Costing methods
For the document with examples, please follow the link: WIP Variance
This scenario is applicable for all costing methods
Under Average/FIFO/LIFO Costing methods, it occurs there is a change in component cost between WIP Component Issue and WIP Component Return.
Under Standard Costing method, it occurs when there is a change in component cost but cost rollup is not performed for the assembly having this component.
Scenario 2: Components issued for dummy Operation
This scenario is applicable for Average/FIFO/LIFO Costing methods. It occurs if component is first issued to a dummy operation and then an operation is added to the job.
Under Standard Costing method, it occurs when you add a component or resource which is not aprt of the BOM/Routing to material requirement of the job and issue it
Scenario 3: WIP Assembly Scrap transaction
This scenario is applicable for all costing methods. For more information on WIP Assembly Scrap and its accounting, refer Doc ID: 550249.1
Scenario 4: Components issued after completion is performed with Final completion flag checked
This scenario is applicable for Average/FIFO/LIFO Costing methods.
Scenario 5: Under issue/ Over issue of components
This scenario is applicable for all costing methods. When the standard requirement is not met, the Cost Incurred does not equal the Cost Relieved.
The only exception is when Final Completion flag is checked for Average/FIFO/LIFO Costing methods
References
NOTE:1326836.1 - A Guide To WIP Costing For Average Costing MethodNOTE:815363.1 - How To Approach Issues Related To WIP Reports Not Tallying With GL And Issues Of Cost Relieved Not Matching Cost Incurred