Manufacturing Variances

Variances occur when the actual cost differs from the predefined or expected cost. These variances can be due to differences in labor or overhead costs, or changes to the bill of material or routing.

This table discusses each variance type:

Variance Type	Description
Engineering	The difference between the frozen standard costs (material, labor, and overhead) and the current costs that are derived from the bills of material, routings, and overhead rates.
Planned	The difference between the current costs that are derived from the bills of material, routings, and overhead rates at the time that the parts list and routing were attached, and the costs that are based on the work order or rate schedule parts list and routing instructions. Planned variances can occur when you revise a work order or rate schedule.
Actual	The difference between the cost values that are derived from the work order or rate schedule parts list and routing, and the material and labor that were actually reported for that work order or rate schedule. Actual variances can occur when you: Issue material. Enter hours and quantities. Enter completions.
Labor efficiency	The difference between the planned and actual labor costs, based on the work order or rate schedule routing.
Material usage	The difference between the planned and actual material costs, based on the work order or rate schedule parts list.
Other	A variance that results from: A cost rollup that occurred in the middle of a work order or routing. You can eliminate this type of variance by running the WIP Revaluation program (R30837). Over-completing or under-completing a work order. You can avoid this variance by setting a processing option for the Variances program (R31804) to restate production costs.

The system calculates variances based on the amounts in the Production Cost table and then stores the different variance amounts in the same table. You can review the different types of variances in the Production Cost Inquiry program (P31022).