Question

Shop Order Variance booking changed between 7.5 and 10

  • 8 March 2022
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Can anyone explain the changes in booking of shop order variances between 7.5 and 10?

We recently upgraded from 7.5 to 10.

Process:

Close shop order

Roll Costs

Re-open shop order

Re-close shop order

 

In 7.5, the re-close of the shop order created exactly the same variances as the original close, so the net on material variance, labor variance and overhead variance and the diff accounts was zero.

In 10, the reclose of the shop order is creating major changes in material, labor and overhead and offsetting it in the diff account. 

This is causing major issues for those trying to monitor these variances.  Can anyone explain what the system is doing?

 

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If started with a shop order with no variance, it would be easier to understand what is happening.

As log as there is no change to the unit cost of the parent part, there will not be any new variances created upon open and close.

But when the unit cost has been changed and it is valid for the Shop Order, then the logic is recalculating variances similar to a fresh shop order which is closing for the first time.

SODIFF +/- Transaction will be created for the difference between the old Unit Cost and the new Unit Cost (set after the cost rollup)

And the variances based on the new unit cost is calculated and posted against the Shop Order when it is closed.

for simplicity, we have a hypothetical shop Order having just one component material with Qty/Assembly = 1 USD

The Standard Cost = 2 USD

We receive the Shop Order for 1 Piece and Closed, the Received Value = 1 USD and 0 Variances

Then we change the Qty/ Assembly =2 Pcs and the new Standard Cost after the Cost Rollup =2

Then reopen the Shop Order

There are no counter variances when opening as there were no variances to reverse.

But when the Shop Order is closed, the closed date of the Shop Order is updated as today and there is a change to the Standard Cost which is valid for today.

So there is a SODIFF- Transaction is created to show the increased Standard Cost

And SOMTRLV+ created since we have only issued 1 component Part (WIP), but the received Value is now Adjusted to 2 USD based on the Standard Cost Valid for the Shop Order.

There is a Parameter in the Costing Basic Data for site with the Code USE_START_DATE_FOR_SO_VAR

If this is set to Y, then the Standard Cost Valid for the Shop Order Start Date is considered for the calculation of Variances, id the newly calculated Standard Cost is effective on a later date than the Start Date of the Shop Order, then the Old Standard Cost which had been used to calculate the Variances will be used and you will not get any new Variances if there are no new transactions added to the Shop Order after re opening.

 

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