Transcript Manufacturing Order Variances - CISTECH

Manufacturing Order Variances
Understanding the Variances Created
during MO Close and Purge
Overview
• MO variances are created during the MO Close &
Purge
• MO Close and Purge is the equivalent of a period
close for WIP
• XA creates multiple variances for each MO
• These variances can be booked to a single account
or to multiple accounts depending on the rules
‘T’ Accounts -Material
Inventory
IP
IU
Uncontrolled
Floorstock
WIP
IX
IP
IU
IX
‘T’ Accounts - Labor
Inventory
IP
IU
Uncontrolled
Floorstock
WIP
IX
IP
IU
IX
LSSA
Earned Labor
LSSA
LRSA
LRSA
‘T’ Accounts - Overhead
Inventory
IP
Uncontrolled
Floorstock
WIP
IX
IP
IU
IU
IX
LSSA
Earned Labor
LSSA
LRSA
Overhead
Absorption
LOHD
LRSA
LOHD
‘T’ Accounts – Material Receipt
Inventory
IP
Uncontrolled
Floorstock
WIP
IX
IP
IU
IU
RM
IX
LSSA
Earned Labor
LSSA
LRSA
Overhead
Absorption
LOHD
LRSA
LOHD
RM
Variances
•
•
•
•
•
•
•
•
VMCS – Material Cost Variance
VMUS – Material Usage Variance
VSCO – Setup Labor Cost Variance
VSUS – Setup Labor Efficiency Variance
VRCO – Run Labor Cost Variance
VRUS – Run Labor Efficiency Variance
VOCO – Overhead Cost Variance
VOUS – Overhead Efficiency Variance
Variances
• VEAC – Miscellaneous Charge Cost Variance
• VCLO – Order Closeout
• Total Order variance is reported on the ‘Order Closeout
Accounting Detail’ report
– Order Closeout Report can be re-run from the MO History
Reports
• Detail variances are reported on the ‘Order Closeout
Variance Report’ at time of Close and Purge
– Close and Purge is the only time that ‘Order Closeout Variance
Report’ is created, it cannot be re-run at a later date
Order Detail Accounting Format
Order Summary
Material Detail
Operation Detail
Order Detail Accounting Format
Order Totals
Formula for calculating variance is:
Setup (lbr) + (Run) Labor + Overhead + Mtl & Pur + Miscellaneous = Total Actual
Total Actual – Receipt (RM) = Difference (Variance)
“T” Account - WIP
Setup Labor – 27.31
Run Labor – 221.05
Overhead – 918.94
Material & Purchase – 135.26
Miscellaneous – 0.00
Total ‘Actual’ – 1,302.56
Receipt (RM) – 703.14
Variance (to zero out the
value in WIP) – 599.42
GLI History
• XA has always had the option to create the ‘Order Detail
Accounting Format’ report for total variance
• When GL Interfaces were created, individual variances
were required
• ‘Order Closeout Variance Analysis’ report was created to
detail the individual variances
– Report shows each item and operation to calculate variances
– Variances are summarized on last page
• Sum of the variances must equal the variance on the ‘Order
Closeout Accounting Detail’ report
VMCS
VSCO
VRCO
VOCO
VEAC
VMUS
VSUS
VRUS
VOUS
Material Variances
• VMCS – Material Cost Variance
– When the MO is created, the bill of material is copied to
the MO
– The standard cost of each component part is copied to
the MO
– If the cost of the component is changed between the
time that the MO is created and the time of the IP
transaction, a VMCS variance will be created
Material Variances
• VMUS – Material Usage Variance
– When the bill of material is copied to the MO, the
extended quantity of each component is copied as the
‘standard’ quantity
– If an Unplanned Issue (IU) transaction is entered, and
the ‘Standard Quantity’ is entered, it will be used to
calculate Usage variance
– Any difference between ‘standard’ quantity and quantity
issued will be part of the VMUS
Material Variances
Labor/Overhead
Variances
VMUS
VMCS
‘T’ Accounts – Material Variances
Inventory
IP
Uncontrolled
Floorstock
WIP
IX
IU
RM
IP
RM
IU
VMCS=
IX
LSSA
Earned Labor
LSSA
LRSA
Variances
VMCS
VMUS
Overhead
Absorption
LOHD
LRSA
LOHD
.01
VMUS= 12.32
Labor Variances
• VSCO/VRCO – Setup and Run Cost Variances
– PC&C tailoring determines if labor will be valued at
Production Facility standard or employee pay rate
(requires XA Payroll)
• If tailored for Payroll, difference between Facility standard
and employee pay rate will be reported in the ‘CO’ variances
– If Facility Standard Cost is changed from the time that
the MO is created, difference will be ‘CO’ variance
• PC&C tailoring question determines if MO standard will be
changed when Facility standard is changed
Labor Variances
• VSUS/VRUS – Setup and Run Labor Efficiency
Variances
– If the actual time charged to the job is different from the
standard, difference will be charged to the ‘US’ variance
– If a Time Basis Code was used in the operation (Run
Labor), XA will calculate the hours per piece
– Actual Run Hours will be divided by the quantity
complete plus quantity scrapped to determine per piece
actual time
VSUS
VSCO
VRUS
VRCO
‘T’ Accounts – Labor Variances
Uncontrolled
Floorstock
Inventory
WIP
IX
IP
IU
RM
IP
RM
IU
VMCS=
IX
Overhead
Absorption
Earned Labor
LOHD
LSSA
LRSA
Material
Variances
Labor
Variances
VMCS
VSCO
VMUS
VRUS
VRCO
.01
VMUS= 12.32
LSSA
VSCO= 27.31
LRSA
VRUS=105.44
LOHD
VRCO = 19.22
Overhead Variances
• VOCO – Overhead Cost Variance
– If the overhead rate/percent changes from the time that
the MO was created to the time that labor was charged
to the operations, difference will be reported in the
VOCO transactions
– PC&C tailoring question determines if facility rates in
the MO are updated when the facility costs are changed
– Machine variances (if machine time is entered in the
routing) will be included in the Overhead Variances
Overhead Variances
• VOUS – Overhead Efficiency Variances
– Setup and Run Labor Efficiency variances will be
extended by the overhead rate/percent (depending on the
Overhead Code of the facility)
– If Machine times are entered in the routing, Machine
cost variances will be included with the overhead
variances
VOUS
VOCO
‘T’ Accounts – Overhead Variances
Uncontrolled
Floorstock
Inventory
WIP
IX
IP
IU
RM
IP
RM
IU
VMCS=
IX
Overhead
Absorption
Earned Labor
LOHD
LSSA
LRSA
Material
Variances
Labor
Variances
Overhead
Variances
VOCO
VMCS
VSCO
VMUS
VRUS
VRCO
VOUS
.01
VMUS= 12.32
LSSA
VSCO= 27.31
LRSA
VRUS=105.44
LOHD
VOCO= 29.91
VRCO = 29.22
VOUS=390.15
Order Closeout Variance
• Cost, Efficiency and Usage Variances are totaled
• Sum of these variances are subtracted from the total
variance as calculated by the ‘Order Closeout
Accounting Detail’ report
• Difference is the VCLO – Order Close Variance
Calculation
VCLO
‘T’ Accounts – Overhead Variances
Uncontrolled
Floorstock
Inventory
WIP
IX
IP
IU
RM
IP
RM
IU
VMCS=
IX
Overhead
Absorption
Earned Labor
LOHD
LSSA
LRSA
Material
Variances
VMUS= 12.32
LSSA
VSCO= 27.31
LRSA
VRUS=105.44
LOHD
VOCO= 29.91
VRCO = 29.22
VOUS=390.15
VCLO= 53.50
Labor
Variances
Overhead
Variances
VOCO
VMCS
VSCO
VMUS
VRUS
VCLO
.01
VRCO
VOUS
Potential Reasons for VCLO
• VCLO records ‘unexplainable’ (by XA) variances
• Incorrect/missing cost for item ordered (i.e. cost on
RM is wrong)
• Unplanned Issue (IU) transactions where ‘Standard
Quantity’ is entered
• Operation added to MO
• Scrap
Scrap
• Scrap costs can be collected via
– The SM transaction in Inventory Management
– The SCRP transaction in PC&C
• SM transaction is valued at the finished item’s
standard cost
• SCRP transaction is valued at the pro-rated cost of
scrap at the operation where scrap was reported
• Cost of Scrap is included in MO Closeout Total
Cost so it needs to be booked to the variance
account to remove scrap from variance
Cost Total Sheet
Pro-rated cost of
Scrap (SCRP)
‘T’ Accounts – Overhead Variances
Uncontrolled
Floorstock
Inventory
WIP
IX
IP
IU
RM
IP
RM
IU
VMCS=
IX
Overhead
Absorption
Earned Labor
LOHD
LSSA
VMCS
VMUS
VCLO
SCRP
VMUS= 12.32
LSSA
VSCO= 27.31
LRSA
VRUS=105.44
LOHD
VOCO= 29.91
VRCO = 29.22
VOUS=390.15
LRSA
Material
Variances
.01
VCLO= 53.50
Labor
Variances
Overhead
Variances
VOCO
VSCO
VRUS
VRCO
VOUS
Scrap
SCRP
Rules
• Individual rules for each variance type do not have
to be created
• GL rules for transactions with asterisks in them are
‘wildcard’ transactions and can be used to create a
single rule for multiple transactions
• For example, all MO variances could be booked to
the same account with a rule for ‘V***’
Variance Transactions
Variance Transactions
Summary
• MO Variances provide a diagnostic tool to review
the accuracy of the bill of material, material
movement transactions and routing standard times
• By analyzing the orders with the largest variances
(favorable or unfavorable) and correcting the
condition that caused them will make a company’s
data/information much stronger!