Hope you are doing very well.
Under the inventory and warehouse management parameters → Bill of materials tab , there are two fields:
Variances to standard
what is the purpose of theses two fields and what is the effect on the production batch orders?
thanks in advance.
Both only apply to standard costing companies.
Use the Cost breakdown field to select No or Sub ledger. The selection of Sub ledger is termed an active cost breakdown. An active cost breakdown is critical for calculating, retaining and viewing cost group segmentation across a multilevel product structure for standard cost items. When the cost breakdown is active, you can report and analyze inventory, work in process (WIP), and cost of goods sold (COGS) per cost group in a single level, multilevel or total format. An active cost breakdown means that activating a manufactured item’s cost will result in storing the cost group segmentation within the item’s cost record.
The selection of none for the Cost breakdown field means that cost group segmentation will not be maintained for standard cost items. That is, a manufactured item’s standard cost will be calculated and maintained as a single amount without cost group segmentation, and the cost contributions of manufactured components will be aggregated into the single amount.
Use the Variances to standard field to select summarized or per cost group. The selection of per cost group enables you to identify purchase price variances and production variances by cost group, and also identify the four types of production variances: the lot size, quantity, price and substitution variances. The selection of summarized means that you cannot identify variances by cost group, and you cannot identify the four types of production variances. You can only view a summarized production variance.
The policy about variance to standard works independently of the cost breakdown policy. That is, you can select a cost breakdown policy of none, and select variances per cost group, so that production variances by cost group will still be captured.
(Taken from TechNet http://technet.microsoft.com/en-us/library/gg231038.aspx)