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Hi,

When we close a shop order, the inventory item is being booked into inventory at a different cost from the actual shop order cost, with the difference being booked as SODIFF+ and SODIFF- (also shown as Calc Variance), and we can’t understand how the numbers in SODIFF+ and SODIFF- are being calculated.

I’ve attached screenshots of the General tab, the Costs tab and the Misc Part Info tab from the Inventory Part screen, as well as the Overview Unit Cost tab and the Cost Estimate tabs from the Shop Order Costs screen. 

On the Overview Unit Costs tab of the Shop Order Costs screen we understand the Accum Cost figure of £8,339.49 as we can see the detailed breakdown of this under Actual Cost Details, but we don’t understand how the Calc. Variance figure of £1,601.75 is calculated.  The product has been booked into inventory at the total value of £9,941.24, so this is impacting on inventory value.

I understand that in some instances the shop order looks at estimated cost, however the Cost Estimate tab from the Shop Order Costs screen shows total costs of £10,055.13 which doesn’t correspond to the inventory value of £9,941.24, so this doesn’t explain this.

Any help would be appreciated.

Thanks,

Steven

Hi @steveng,

The Calc. Variance (SODIFF) figure is the difference between the inventory value and the actual accumulated cost of the shop order.

  • Accumulated Cost (Actual Cost): This is the total cost incurred during production, as displayed on the Overview Unit Costs tab.

  • Inventory Value: The cost at which the item is booked into inventory, shown as £9,941.24 in your case.

  • Cost Estimate: This is often used as a comparison point but does not directly impact the SODIFF calculation.

Calculation of Variance:

Calc. Variance=Inventory Value−Accumulated Cost 

Given:

  • Accumulated Cost: £8,339.49
  • Inventory Value: £9,941.24

Calc. Variance=£9,941.24−£8,339.49=£1,601.75

This matches the Calc. Variance figure you mentioned.

Hope this helps!

Hi @Yathartha Karunananda ,

Thanks for coming back to me, this is helpful but doesn’t fully answer my question.

What I don’t understand is how the inventory value is calculated.  As you will see in the attachments on the Inventory Part screen, this product is set up as Cost per Lot Batch, so I would have thought that the Inventory Value would be equal to the Accumulated Cost, but in this instance there is a difference.

Do you have any thoughts on how the Inventory Value is being calculated in this example?

Thanks for your help,

Steven

 

Hi Steven,

Your inventory valuation is set to Standard Cost and your part cost level is set to Cost Per Lot Batch.

Upon each receive transaction (OOREC transaction) for the shop order the system will calculate the actual WIP build up so far, looking at the accumulated cost (as you correctly write above) and then system also checks (and adds) if there are any unissued material cost and if all operations are not completely reported, then those machine- and labor costs are also added. Remember it does so for each receipt. Please consider the case if you receive 10 pcs out of a total lot size of 100, then system includes the “not yet issued component cost” and “not yet reported operation cost”, for the expected 90 pcs remaining. Otherwise cost will go up and down dramatically.

Okay

Then system has a total accum cost + “a good estimate of remaining stuff to issue and report”

Okay

Then system divides this with (qty completed + GREATEST OF (received qty, remaining qty))

and it does so per cost bucket.

System has now a unit cost, per cost bucket, which will be used as the unit cost of the lot batch

Do you have multiple OOREC transactions for this shop order? If you look at your OOREC transactions - does it makes sense with what I wrote above?

Do you use by-products?

I wonder why we cannot see the inventory value of this part for this lot batch? Have the lot batches been shipped through the “door”? Do you use one lot batch no per shop order?

In this case you have done some under receipt but that is not much. 76.833 versus 77.

And for some reason the calculation I have kind of outlined above has captured quite a lot of more cost than the 8339.

Hope we can resolve this.

Cheers,

Mats 

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