We have a job completed for STOCK, that was completed for one piece at 1 hour of labor. Accounting then ran the Manufacturing Variance report and ended up with three lines of MFG-VAR transactions, all for debit transactions. The three lines are $25, $25, and $37.14. We know that the two $25 transactions are labor and burden costs; and the $37.14 is for the material to make the part. MY QUESTION is: why is it showing up on our manufacturing variance reports if it is received to stock and shipped out from inventory?
*Inventory/WIP Reconciliation Report
Check the timing of the receipt to stock compared to the timing of the last activity on the job. Any activity after the receipt to stock, or shipment if you are shipping directly from the job, are considered late arriving costs and appear as MFG-VAR tran type.
If you’re using standard costing, then check to see if the job part number has a standard cost. The job is received to stock using the standard cost of the part (if using std costing). So, if that part did not have a standard cost, then the part cost is considered $0 and all the actual material, labor & burden costs will go to variance.
If you’re using Average Costing, then any transaction done (ex. stk-mtl, labor, subcontract, etc) after the job receipt will go to variance as Claudia mentioned above.