In this Document

Applies to:

Goal

Discrete job has variance while we are using average costing

Solution

Symptom: Costs incurred do not match costs relieved
Cause: This can be due to standard functionality.

There are at least seven known cases where the system can generate variances on WIP
jobs in an AVERAGE cost organization:

1. When some quantity of the job is scrapped and there is no scrap account.
The value of the scrapped quantity then stays with the job and goes into the
variance account if the job is not closed through the WIP completion screen.

2. When a transaction causes a negative amount in the inventory, an entry is
made into the variance account to balance the entry. This also represents an
inventory valuation error as inventory is being issued before receipts.

3. When returns are made to the job at a cost different from the completion cost.

4. When items are returned to inventory after the cost of the item has been changed.

5. When the final completion transaction is made before the job requirements are completely satisfied.
   
6. When using either the predefined rate or the actual PO price for outside
    processing charges.

7. When any actual elemental value is either Greater than OR Less than the standard BOM value. 
     The system will debit or credit the elemental  variance account that was defined in WIP parameters