Why we get Variances during production Process - SAP business One
Why does production variance (total variance) occur? What happens to the total variance when you close the production order? If there is a difference between the value of the issued components and the received products, this results in production variance, which is referred as total variance in the application. Production variance often occurs because of the following: 1. Component overconsumption: The quantity of components consumed in production was greater than planned, which causes a negative variance. 2. Component savings: The quantity of components consumed in production was less than planned, which causes positive variance. 3. "Receipt before issue" scenario: The receipt from production is added before the issue for production. In this scenario, the product cost is based on the product cost estimation, which is derived from: a) The current production order structure (in other words, the list of production order components along with their planned quantities). b) The c...