8 Replies Latest reply: Mar 27, 2012 2:04 PM by Ranjit Simon John

# production order variance

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Dear all ,

i have one production order with CNF & DLV , TECO status . When we are calculating the Variance for the production order

Target Cost     Actual Cost         Allocated Actual    WIP    SCRAP   VARIANCE

153,000          149,000               0                          0          0              149,000

How come the variance is 149,000 , ( actually it is supposed to  be 4000 rs ).

Pl guide .

• ###### Re: production order variance
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Hi,

Regards,

Sundhu

• ###### Re: production order variance
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Where to check the Planned cost ? Prodn order -->goto -->  Cost --> Analysis. ?

• ###### Re: production order variance
Currently Being Moderated

Hi,

Yes you can track the Planned Cost through Cost analysis.

Regards,

Sundhu

• ###### Re: production order variance
Currently Being Moderated

Hi,

Target cost is the cost of goods which u have actually produced but planned cost is the cost of total production order. for example you created a production order for 1000 PCs but you produced 40 PCs uptill now so target cosr would be the cost of 40 Pcs and planned cost would be the cost of 100 Pcs. so i think your planned cost is 298,000 that's why variance is 149,000. Hope you are clear now

• ###### Re: production order variance
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Actually The production order Qty is  50 & delivered is 50 qty .So how to track the planned cost now ?

• ###### Re: production order variance
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Hi,

Check the std cost estimate in material master(costing tab 2) of finished goods for the current period. If not then you have to first create standard cost estimate (CK11N) and then have to do costing run and release for current and future period(CK40N).

After doing this, your standard cost estimate will appear in material master.

Then do the production cycle from GI of raw material to GR of finished goods.

Then do the variance calculation.

You will find the variance as Variance = Allocated Actual - Actual cost.

Thanks

Hrishi

• ###### Re: production order variance
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So here as per my Question input : Variance = Allocated Actual - Actual cost.

Variance = 0 -149000

Variance = -149,000  but it is +149,000 why is it so ?

• ###### Re: production order variance
Currently Being Moderated

Hi,

You have to analyse the process order through KKBC_ORD.

There are several reasons for the variance.

Kindly go through the blog "Understanding Production Order Variacne Part - 1" and let me know whether you are able to crack down from where the variacne is posted.

Thanks

Ranjit