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Creating Production variance

Former Member
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I am testing transactions in the Production module to better understand it.

I created a BOM with 2 backflush component items.

I entered a production order for a qty 1.

The BOM has qty components of 1 each to keep it simple. One of my items is overhead (labor) so one hour of labor for production order qty of 1. Very simple..

I created the production order and released it. Since both components were backflush I then went straight to close the production order. I want to adjust the labor item on the production order because let's say it actually took me 3 hours to produce this production item. Where do i enter the 3 hours so SAP calculates a 2 hour (3-1) variance?

Accepted Solutions (1)

Accepted Solutions (1)

Former Member
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Hi Robert ,

Take a look at this wiki ,

How to include by product in a Production Order?

https://www.sdn.sap.com/irj/scn/wiki?path=/pages/viewpage.action&pageid=23593837

How to include labour costs in a Production Order?

https://www.sdn.sap.com/irj/scn/wiki?path=/pages/viewpage.action&pageid=22741052

Hope this helps

Bishal

Edited by: BIshal Adhikari on Jul 22, 2009 3:33 PM

Former Member
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Thanks for the links Bishal. That's exactly how far I've gotten with SAP. So in the labor costs link example they have a labor costs with standard cost of $15 and on the BOM its $3 (.2 *15). However, what if on that production order run it took 1 hour instead of .2.

Where does that 1 hour of time get entered so that SAP can calculate a variance as part of the production process journal entry?

Former Member
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I tried adjusting the Base Qty value for my labor item on the production order before I closed it, but SAP then automatically adjusted my Planned Qty to match it. I left both columns with their adjusted values for the labor item and tried to close it hoping SAP might some how calculate a variance, but I got a system message "Not all Products/Components were issued for this production order' are you sure you want to close it?".

It doesn't look like SAP allows you to adjust the qty for a standard cost item like labor on a production order. So even though my labor costs might be greater than budgeted a variance won't get calculated. Is this correct?

Former Member
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Hi Robert ,

Actually this I think is the limitation of SAP . You cannot create varaiance against non inventory item which is very useful because overhead is not fixed and it changes . When you change during release time ,it actually overides the quantity so you cannot track .

If you want to know the variance , you need to calculate by your self and adjust it by using Item revaluation .

I agree in this part with you

Thank you

Bishal

Former Member
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Thanks Bishal. I spent a great deal of time testing various production orders and could not find a work around. Thanks for confirming my findings.

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A way of solving this problem is to use a standard inventory item, rather than a labour type.

That way you can use the manual issue, rather than the backflush.

You need to do a monthly stocktake to add sufficient labour hours into your inventory.

Former Member
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You need to change the quantity of the labor item before entering the receipt from production. Update the Production Order, then do the receipt.

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