Production Cost Variances

#costing

#production

Dynamics 365 Finance

The article discusses the issue of unexplainable production order cost variances in Microsoft Dynamics 365 Finance and Supply Chain (D365 F&SC) and provides tips for troubleshooting and understanding the causes of these variances.
Production variances are calculated after ending a production order for a standard cost item and reflect a comparison between the reported production activities and the calculation of standard costs for the production item.
The variances do not reflect a comparison to the production order's estimated costs.
The four types of variances calculated are lot size variance, production quantity variance, production price variance, and production substitution variance.
The article provides typical sources of each variance type and explains how they can occur.
To troubleshoot production cost variances, the first step is to check the cost calculations compared to the active standard costs.
The article provides steps for comparing the calculated costs and active costs in Microsoft Dynamics 365 Finance.
It also mentions a scenario where a substitution variance can occur and provides a solution for fixing the problem by running the bill of materials (BOM) calculation on the finished goods item.

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#production #costing