Work order variance analysis

Under standard costing, the work order was expected to cost the standard. It actually cost something else. The difference is variance — and its composition tells you what happened. The variance types. Material usage — we used more or less material than the structure said. Material price — material cost more or less than standard. Resource efficiency — the job took more or fewer hours than the work definition said. Resource rate — labour or machine cost more per hour than standard. Overhead absorption — we absorbed more or less overhead than we incurred. What each is telling the business. Usage variance means scrap, yield, or a wrong BOM. Efficiency variance means a process problem, a training problem, or a wrong routing. Price variance means purchasing, or a stale standard. The uncomfortable truth: a large persistent variance usually means the standard is wrong, not that the plant is failing. Before…

In this module: Module 17 · Cost Processing and Close

1. 1From transaction to journal
2. 2Transferring transactions to costing
3. 3Creating cost accounting distributions
4. 4Creating accounting
5. 5Reading the accounting
6. 6Work order variance analysisFree preview
7. 7Cost accounting period close
8. 8Reconciling to the general ledger
9. 9What breaks
10. 10Lab: close the period and prove the number