Hi!
In the Production Variance form (also in Production–>Reports–>Analysis–>Production variance report) I get no amount in the quantity variance column for overhead lines.
The overhead was set up as follow:
-
Cost Group node (Var_OVH - Variable costs overheads)
- Cost Group Type: Indirect
- Behavior: variable
-
Rate node (LAB_OVH - Labor overheads)
- Subtype: process
- Calculation basis: a Total node grouping all the direct manufacturing cost
- Amount: 1100
- Status: Active
-
Rate node (SET_OVH - Setup overheads)
- Subtype: setup
- Calculation basis: a Total node grouping all the direct manufacturing cost
- Amount: 1100
- Status: Active
Does anyone have any clue why I get no value in the Production Variance form and report? It seems like AX doesn’t calculate quantity variance for nodes based on calculation (such as Rate and Surcharge nodes). If so, what’s the reason ?
I’m testing it on Ax 2009 SP1 RU7.
Thanks in advanced!
Could you tell us your costing method and method of production consumption?
Hi Adam!
I’ve read many posts by you and most of them related to this subject, so I’m glad to have your support.
From the model group the costing method is Standard and in Production parameters the Comsumption is set up as follow:
- Automatic execution
- BOM: Always
- Route: Route group dependent
- Auto-report as finished
Thanks for answering so fast!
Some extra info:
The item type is Formula.
The variance I think I should see in the Quantity Variance column, I´m seeing it in the Price Variance column just summed up with the right amount.
I couldn’t found the reason but I guess it has a good one.
When are you actually consuming the product? Are you automatically flushing or manually creating picking lists and recording actuals and posting them?
In addition have you ended the production order?
On PO startup the picking list is automatically created with suggested comsumptions and some comsumptions are manually changed then and posted.
The PO has been ended.
Okay so next question (now I have looked at your setup properly [:$]) is the recording of time from the routing. Are you creating this at the start and manually altering the times prior to posting as well?
If you are then can you give me an example of expected times in the break down.
Your calculation is looking at direct manufacturing costs for the process and setup, Presumably you have a costing sheet note for direct manufacturing costs with the labour cost groups defined beneath them? Can you confirm that the work centre used in the routing has a setup and process cost category that has a cost group defined in your direct manufacturing node?
Because this is related to time and the variance based upon teh hours posted to the setup and process elements you will not get a quantity variance, only a price variance. Because you were looking for “Quantity” variances I was lead down the avenue of picking and components, but the setup described is actually for the route posting and is time based, meaning you only ever get a price variance because it is not directly related to quantity - the variance for setup is to setup for the standard batch, any time element is a price variance based upon hours and not the fact the setup maybe for a greater batch quantity. Does this make sense?
In Ax I can see that the quantity variance is related to a diference between the planned consumption (hours) vs the real consumption multiplied by the category cost price.
When altering the quantity of hours (after starting up the PO) this is reflected in the Production Variance form in the Quantity Variance column.
The overhead amount is calculated summing up the amount from the hours (setup and process), but the alteration named before doesn’t change the Quantity Cariance for the overhead, but instead of it is added to the Price Variance.
In following screen shot there is an example where there are variances in Price and Quantity for resources. The Overhead line sum up 25000.05 correctly, but it should be divided in the Price and Quantity variance columns as it is shown:
Thanks in advance.
You would need to ask Microsoft for a logic explanation but I beleive they will say that the routing variances from an overhead perspective cannot be attributed directly and consistently to a quantity, so if you starft 10 and finish 9 and the hours relate to the 9 then there is argably a quantity variance, but the issue here is the reason for the 9, the consumption and time could be related to the production of 10, it is just that one is scrap. The setup time is therefore divorced to the final or consumed quantity, as is arguably the process time - variances could be related directly to a quantity, but may not be. Where we have actual and planned consumption there is a direct quantity variance. Arguably any time based variance cannot be directly related to any quantity and therefore is not a quantity variance and the only way to consistently report the variance with any certainly. Arguably the proces overhead rate could have been written to post as a quantity, but it is always related to time, never quantity (although this is arguably the source).
I believe you are looking for something it is not designed to do, and I am pretty sure this is not setting/parameter controlled. This is why I suggest you ask the question to Microsoft.
I’ve been debugging the whole process form the activation of standard cost of the item produced to the end of production order.
I’ve checked that for the overhead it never take into account the qty of hours in the route. Insted it’s fixed to the qty planned, estimated or finnished in the produccion order.
For us, it’ is a strange behavior and I still don’t understad the reason, but that’s how it have been designed.
Thanks for everything!
I would expect the OH to be calculated on the actual hours posted, which is probably what you are saying, and then comparing back for variance to the current standard cost of the item. I am guessing that the reason is the overhead element and the difficulty to relate this consistently to a specific quantity variance, therefore it is treated as a price variance and is seen in the overhead node and contributing to the overall variance. However the only potential explanation you will get on the design and thought brhind this is from Microsoft. Personally I would want the overhead variance tied directly to a quantity but I can also understand the difficulty of this given the structure of the software and teh processing.