Production Variance

I am trying to get a variance from within MRP/CRP. Scenario: I have created a production BOM and attached it to an item (Specific Costing) I have created a sales order (Demand) I have run MRP, and created a Production Order from it. I consume all the inventory needed (Forward Flushing) Production takes place. (outside Navision) I process the Output jnl. Included is the Output (X no. of units) Also posted is the “Run time” i.e.the Capacity Entries against the routing steps. Problem: If any extra Inventory Items are consumed there is no variance posted If any extra Capacity Time is consumed there is no variance posted. I believe that there should be based on the following numbers: Total Expected Cost of Inventory = $16,000 Total Expected Cost of Labour = $4,000 Therefore Total Expected Cost = $20,000 Actual Cost of Inventory = $17,000 (+$1000 Variance) Actual Cost of Labour = $5,000 (+$1000 Variance) I would expect the posted transactions (Based on Specific Costing) to look a little like this: Consumption of Inventory = $17,000 Consumption of Labour = $5,000 WIP Entry = $22,000 BUT the WIP Entry uses the Cost from the Item Card $20,000 Therefore we have a $2,000 variance that will continually increase the WIP account but never correct it. When I run the Adjust Cost Item entries batch Job, I get small transactions, roundings mainly, from purchase transactions. When I then Complete the initial transaction (The Sales order) it takes the Finished good out of inventory interim, not Inventory. Am I missing something or has Navision Manufacturing got problems?

Hi John I am afraid you are missing something. [:D] Assuming you are posting the consumption differences through the consumption journal attached to the production order, you will see the material differences. The capacity time differences will also be posted through. These will hit the accounts in the inventory posting set-up as defined for the material variance account and the capacity variance account. The variances, I believe, are calculated after the released produciton order becomes finished (so nothing else can be posted and the variance is final) so my first question would be have you done this? Secondly I believe you have to run the adjust cost item entries, but you are doing this. Have a look at the finished production order and then the value entries from it - you should see an entry type of “variance”. It is no real help to you, but I see them here processing it through on 3.70.

I always forget at least one good point and this is probably yours - if the items you have consumed have not yet been invoiced from a purchase perspective they will not be moved from WIP to variance. This only happens at the point the true cost is known, so make sure you have invoiced all purchase orders consumed in the WIP entries [:D]

Hi, You will only get variance postings when you use standard costing! Best regards, Ejner

Hi Ejner John will get variances as he is using “Specific” costing, so he is right to look for them. Well that is how I remember it anyway [:D]. Although I also remember issues around completing serialised items - if you flag the last operation as finished whilst posting the output the system left the item in limbo (resolved in 4.0!) So John - how did you get on???

Hi Steven, Are you really sure that you get variance posting when you use specific costing? According to my experience you will only get variances when using standard costing. (experience with specific costing from versions older then 3.10!) Has this changed in newer versions? Ejner

Was kind of hoping John would respond! Give me a while and I will run it through!

Well I must simply be getting my systems in a muddle [:I] I ran it through on 4.0 and got slightly confused with the adjust cost item entries, so to make double sure I ran one through in 3.70. Specific costed items do not generate a variance, therefore John you will have to use the costing method “Standard” with the serialised item to obtain manufacturing variances. Of course the other points I said will then apply [:D] Thanks for pointing that out Ejner. [Oops!]

Thankyou for your replies, But I feel I may have worded my question incorrectly. The problem I am facing is that I am getting extra WIP transactions that aren’t being balanced at the end of the transaction. My use of the word variance was incorrect. I have tested and found that the Variance Account does just work with Standard Costing. Because of our environment, we cannot use Standard Costing, as nothing is standard. With Specific Costing, however, I understand that it should use the Ledger Entries to Calculate, and the Cost should always be correct. BUT I have found that even if you consume extra Materials or Labour the “Unit Cost” still defaults from the Item card. BUT the Adjust Cost Batch Job does find the Material Variance, but not any Labour Variance. This is odd because trhe F9 Statistics are all populated with the correct figures, which would indicate that Navision is working. Yet correct WIP transactions are not being posted. I think this issue may also be linked with another problem we have which is Purchase Items Received not Invoiced, as we have quite a few. …

Hi John The unit cost on the production order does come from the item card, but this is an indication of the cost. When you look at the actual entries of the item, if everything is updated, it will show the true cost of making the item. This should be able to be seen in at the item ledger entry level, and the detail from the value entries/general ledger entries. As an example the unit cost of a item you have never produced before will be zero, assuming you do not manually populate the cost, but this is not the cost of the item this is derived from the entries. As an example I have a simple parent with one item in the BOM and a routing of one operation. I calculated the standard cost and it came back as 12.19. This was 10 minutes production at 1.20 (12.00) and the cost of the single component at 0.19. Loading this on the produiction order the cost was zero, as I populated nothing. I then over reported consumption of the component by 2 and the run time by 10 minutes. Finishing the production order and running the adjust cost item entries I can see the item card of the parent now has an average, unit and last direct cost of 24.57 (20 mins at 1.20 = 24.00 and 3 at 0.19 = 0.57). Looking at the item ledger entry the cost of the output is 24.57 and if you navigate and look at the general ledger entries you will see the breakdown of the costs. Does this help??

Yes it does, I feel that my problem may have something to do with a Mod done previously that has not been documented, and makes this functionality not work. AND/OR Purchased Items Recieved not invoiced. I am continuing to work though the problem. By the way, is there still finctionality to Subscribe to a topic? i.e. Get an email if there is another posting to it?

Hi John Check the received not invoiced anomolies first as these should be easier to locate. Yes you used to be able to subscribe to topics - and in the top menu you have a subscriptions option. Cannot find the option though and I know Erik had a few problems with this - it maybe on his to-do list [:D]

Look for the “Bookmark Topic” link. It’s both at the top and at the bottom of each thread.

Hi Nelson A Bookmark and a Subscription I believe are different. With bookmarks you are marking a favourite topic. However with subscriptions it emails you to tell you of an update. In the top menu you will see subscriptions as well as bookmarks - so something is different [:D] Looking at the FAQ


More conveniently, you can subscribe to just an individual topic. You will be notified of any post made within that topic. Each level of subscription is optional. The administrator can turn On/Off each level of subscription for each Category/Forum/Topic. To Subscribe or Unsubscribe from any level of subscription, you can use the “My Subscriptions” link, located near the top of each page to manage your subscriptions. Or you can click on the subscribe/unsubscribe icons ( ) for that Category/Forum/Topic you want to subscribe/unsubscribe to/from.

As this option is not available on a posting in this forum I guess Erik has turned it off. If you look at the “announcements” forum you will see the subscribe to topic just along from the bookmark topic option. I have asked Erik to clarify this.

Yes, you’re right. I just found that out the hard way because I got no e-mail’s warning me of an update to this topic. But still, I don’t see any Subscription link… John, quite sorry if we’re ruining your topic with this lateral discussion.

But you see it in the Announcements forum?? I believe Erik has turned it off in this forum, but I have asked him this question in the moderators forum. I will let you know what he says!

Yes, I just noticed the “Subscribe to Topic” link in the Developer forum. It should be just some kind of yes/no setting.