Overhead Differences
G/L difference accounts are determined through overheads or connection codes. Calculations are performed as follows:
Budget Difference = ((Applied Actual Cost – Budgeted Cost) / Total Actual Quantity) * Actual Production Order Quantity
Capacity Variance = ((Planned Quantity – Actual Quantity) * Budgeted Unit Cost) / Actual Quantity) * Actual Work Order Quantity
Efficiency Variance = ((Actual Work Order Quantity - Planned Work Order Quantity) / Budgeted Planned Unit Cost
Workstation and Labor Differences
G/L difference accounts for employees and workstations are determined through connection codes, and through workstation records or connection codes respectively. Calculations are performed as follows:
Labor Efficiency Variance = (Actual Resource Usage Hours - Planned Resource Usage Hours) * Planned Unit Cost
Labor Rate Variance = (Actual Unit Cost - Planned Unit Cost) * Actual Resource Usage Hours
Workstation Efficiency Variance = (Actual Resource Usage Hours - Planned Resource Usage Hours) * Planned Unit Cost
Workstation Rate Variance = (Actual Unit Cost - Planned Unit Cost) * Actual Resource Usage Hours
Note: Material differences are tracked through actual usage and scrap slips.
Corrections
Corrections are aimed to adjust cost differences resulting from changes such as input from production quantity or cost factor changes and usage / scrap / warehouse / input from production transactions that have planned transactions but no actual transactions by transferring them to right accounts with right shares. Two transaction types can be transferred:
- Corrections for Input from Production Transactions
- Corrections should be performed when cost shares are changed. Cost shares can change in two circumstances:
- When the actual quantity of a planned input from production transaction linked to a production order is different than the planned quantity, and
- When the cost factor of a planned input from production transaction linked to a production order is different than the planned factor.
- Corrections should also be performed when an input from production transaction has a planned transaction but no actual transaction.