Myte Myke and Production Cost Variances
(Total Shop Floor Control)
Prepared by Arthur Rawn
December 18, 2001
Table of Contents
Example 1:
Variance Report w/ Defaults
Example 2:
Variance Report w/ Employee Rate Option
Example 3:
Variance Report w/ Employee Rates Options and ITM Cost Change
GL Variances and
Production Costing Report
Executive Summary
The only variances that will show up in the GL posting and on the production costing report are quantitative. This is because both the "used qty extended cost" and "planned qty extended cost" are both calculated using the same standard cost. The standard cost that is used is the standard cost that resides in the standard cost SCFN (SC-31) file for the parent item, and the ITM file (FM-7) for materials at the time of the production order creation.
All variance reports have the same completed numbers. These are derived from the "Planned Quantity" times the standard cost live fields at the time of creation. The actual numbers can vary greatly; this is because there are five (5) different options for Material costs and two (2) different options for operations costs.
Four of the material costs will read data live at the time of the report and the fifth option reads data from the detailed transactions table.
One of the operations costs reads from the detailed transaction file and the other uses the work center rate at the time of shop order creation.
General Lingo / Definitions
PPWIPM: WIP Master Table, Header File for Shop Orders (PC-1)
PPWIPD: WIP Detail Table, BOM for Shop Orders (PC-1)
SFCOST: WIP Transaction Detail, the details of Material and Labor reporting on Shop Orders (PC-20 and PC-21)
GLIYTD: General Ledger Detail File, each transaction sent to the GL
ITM: Item Master File (FM7)
SCFN: Standard Cost table for the Finished Goods (SC-31)
SCOP: Standard Cost operations files. Stores the work center rates for each operation. (SC-2 or FM-41)
TKEMP: The employee file, this stores clock numbers, names, and rates for each employee (FM-42)
Note: When referring to the SCFN table,
we are only referring to the LIVE fields.
The TEMP fields are not used in variance calculations.
Common Steps / Procedures
1) Production Order is created, (PC-1). The system stores the Standard cost field for the Finished Item from the SCFN in the PPWIPM table. The system also grabs the standard cost for Raw Materials and Sub-assemblies from the ITM and places them in the PPWIPD. The operations standards are also grabbed from the SCOP file and placed in the PPWIPD file.
2) Raw Material and Labor transactions are performed (PC-20 AND PC-21). When a material transaction is performed, the system grabs the current standard cost from the ITM table and places it in the SFCOST table. When a labor transaction is performed, the system grabs the employee rate from the TKEMP file and stores it in the SFCOST table. There is also a TOTAL actual cost that is updated in PPWIPD, that is transferred into PPWIPM as the TOTAL Order cost as the order is closed in PC-25.
3) Production Order Closed (PC-25). Nothing to really talk about here, you enter the number of pieces completed for the production order.
4) Update Orders (PC-2B). Here is where the GL variances are calculated. The system calculates variances at standard. It takes the amount of material that should have been used based on the QTY produced and multiplies it by standard cost stored in step 1. Then it takes the QTY used and multiplies it by the standard cost stored in step 1. The difference is the variance.
Variance Reports PC-34
The variance report can show variances based on several different options. This report is going to talk about the default options as shown here:
Looking at this the report is going to show the Actual Material Costs based on the ITM standard at the time of the report. The Actual Operation Costs are going to be based on the Standard for the Work Center at time of shop order creation.
In general, when you look at the report the under the “AMOUNTS” section you will see a “ACTUAL” column, these totals for materials are based on (QTY USED * ITM STANDARD COST). The totals for operations are based on (QTY USED * WORK CENTER RATE).
Below is a sample of variance report based on the defaults: