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  • 1.  Manufacturing variances when using Lot Valuation

    Posted 03-07-2022 13:04
    How does one account for manufacturing variances when Items are set to Lot valuation?

    I have a candy manufacturer that had all their items set to Standard Cost. When they did B/M Production Entry any deviations from the BOM produced manufacturing variances to GL account as per Product Line Maintenance. But now that all items are Lot valuation, for FDA tracking purposes, production entry just creates a lot of that item with a higher cost and no variance.

    I am thinking they will need to keep track of the overages and make adjustments. Hoping there is a better way that I am not thinking about.

    Any insights will be appreciated

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    Greg Stiles
    S & W Microsystems
    Torrance CA
    310.787.1010
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  • 2.  RE: Manufacturing variances when using Lot Valuation

    Posted 03-07-2022 17:31
    Probably SOL.  I think there is an Idea posting regarding allowing Lot/serial number tracking @ standard costing.  Maybe one day before everyone has jumped ship it might become reality
    ​

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    Jeff Schwenk
    FORMER 90M Board Member -140,000,000 is a TERRIBLE thing to waste!!!
    Bottomline Software, Inc.
    Waynesboro VA
    540-221-4444
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  • 3.  RE: Manufacturing variances when using Lot Valuation

    Posted 03-08-2022 10:45
    Vote for the idea......

    https://www5.v1ideas.com/TheSageGroupplc/Sage100ERP/Idea/Detail/11230


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    Jeff Schwenk
    FORMER 90M Board Member -140,000,000 is a TERRIBLE thing to waste!!!
    Bottomline Software, Inc.
    Waynesboro VA
    540-221-4444
    ------------------------------

    Original Message


  • 4.  RE: Manufacturing variances when using Lot Valuation

    Posted 03-08-2022 13:30
    I voted, for what it's worth. I had given up hope that this could ever happen.

    Karen

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    Karen O'Lane
    Accounting Systems, Inc. (ASI)
    Fresno CA
    803.252.6154 x242
    559.577.4142
    90 Minds Treasurer
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    Original Message


  • 5.  RE: Manufacturing variances when using Lot Valuation

    Posted 03-11-2022 10:29
    I'm not an accountant but isn't it better to have true costs inside the inventory value, posted to CoGS at sale?  I thought that was the main benefit of using cost tier valuation types...

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    Kevin Moyes
    Technical Systems Analyst
    Munjal White Consulting Co.
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  • 6.  RE: Manufacturing variances when using Lot Valuation

    Posted 03-11-2022 10:53
    @Kevin Moyes  That is an excellent question.  In manufacturing,  it is valuable for management to compare actual costs to a standard.  Cost accountants refer to this as variance analysis. For example, if management determines (budgets) a component's cost should be $1 then the standard is $1.  If the actual cost is $1.20 then there is a $.20 unfavorable variance ​.  If the component's actual cost is $.90 then there is a $.10 favorable variance.  Inventory is adjusted to actual at periodic intervals.

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    Doug Higgs
    Midwest Commerce Solutions, Inc
    (312) 315-0960
    Chauffeur, Chef, and Personal Assistant to Sprinkles
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    Original Message


  • 7.  RE: Manufacturing variances when using Lot Valuation

    Posted 03-11-2022 11:07
    OK, that makes sense: knowing when expected costs are different than reality. 
    Comparing production output value to Standard costs should be a simple report (and more fine tuned, item by item, vs a variance account balance), looking at output value (BR / JR / WR transaction unit costs) vs Standard.  I'd think a simple pivot table could do that in Excel (depending on how much line data there is).

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    Kevin Moyes
    Technical Systems Analyst
    Munjal White Consulting Co.
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    Original Message


  • 8.  RE: Manufacturing variances when using Lot Valuation

    Posted 03-11-2022 11:03
    BTW.  Cost tier valuation types such as FIFO or LIFO don't necessarily give a more accurate valuation than any other valuation.  The cost of goods sold can vary significantly depending on the valuation method and whether the cost is increasing or decreasing over time and how quickly the inventory turns.  No valuation method is perfect, just like no depreciation method exactly reflects the changing value of an asset over time.

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    Doug Higgs
    Midwest Commerce Solutions, Inc
    (312) 315-0960
    Chauffeur, Chef, and Personal Assistant to Sprinkles
    ------------------------------

    Original Message


  • 9.  RE: Manufacturing variances when using Lot Valuation

    Posted 03-11-2022 11:05
    Edited by Doug Higgs 03-11-2022 11:08
    Actually, specific identification valuation methods such as lot or serial special orders (like a special order computer) can be the most accurate if when the sale occurs, the exact cost is matched with the sales. 

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    Doug Higgs
    Midwest Commerce Solutions, Inc
    (312) 315-0960
    Chauffeur, Chef, and Personal Assistant to Sprinkles
    ------------------------------

    Original Message


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