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Reporting Labor Variances
Reporting Labor Variances
Inventory Accounting calculates material, labor, manning, overhead, and miscellaneous cost variances for all manufacturing activity that has occurred in a period. Material variances are discussed in the key concept on reporting scrap. This key concept discusses the options for calculating and posting labor, manning, and overhead variances. Miscellaneous cost variances are discussed briefly in the Calculations key concept. For more information, refer to the Inventory Accounting Program Documentation Manual.
Note: Variances are calculated by comparing standard or planned costs with actual costs; they can only be calculated when the actual costs are recorded. Actual labor and machine time are recorded in the Shop Floor Control module for MRP parts. If this module is not installed, no labor variances are calculated. In addition, the variances are not calculated for JIT parts if time is not recorded against items.
Most of this key concept discusses calculations in terms of manufacturing orders. In a Just-in-Time environment, variances are calculated for flow receipts rather than manufacturing orders. Further details on variance calculations in a flow environment are provided in the Flow Production section of this key concept.
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