For variances calculated on a production order, the lot size, quantity, and price variances seem to make sense. However, the substitution variance leaves me perplexed.

Scenario:

I have set up a costing sheet with a surcharge indirect cost with the subtype of total attached to the direct material. Through the BOM calculation for a manufactured item, the surcharge is included in the calculation for the cost with price quantity and unit both being 1. When I end a production order for 1 of the manufactured item, a substitution variance is calculated and posted to the ledger for the same amount as was already calculated in the cost for the manufactured item.

Question:

Why is a substitution variance being calculated for the surcharge if the surcharge is already included in the cost of the manufactured item?