Description of the variance account that is used in Microsoft Dynamics GP Bill

Applies to: Dynamics GP 2010Dynamics GP 2013Microsoft Dynamics GP 2015

INTRODUCTION


This article describes the variance account that is used in Great Plains 7.5 Bill of Materials and in Great Plains 8.0 Bill of Materials. The variance account that appears in the Assembly Distribution Entry window is used whenever the sum of the costs of the components does not equal the cost of Finished Good. This cost comparison is made during posting.

To open the Assembly Distribution Entry window, follow these steps:
1. Click Transactions .
2. Point to Inventory , and then click Assembly Entry .
3. Click Distributions .

MORE INFORMATION


Because Perpetual FIFO and Perpetual LIFO always use the sum of the actual costs of the components, there is never a variance between the sum of the costs of the components and the cost of Finished Good. Therefore, the variance account that appears in the Assembly Distribution Entry window is not used.

However, there can be a variance between the sum of the costs of the components and the cost of Finished Good in the following cases:

• Periodic FIFO
• Periodic LIFO
• Average Perpetual



     
To test this information for the Periodic FIFO case, follow these steps:
1.

Set up the following two items as Periodic FIFO in Item Maintenance:

• Finished Good with a $10.00 standard cost
• A component with a $12.00 standard cost



     
2. Open Item Maintenance.

To do this, click Cards , point to Inventory , and then click Item .
3. Assemble one Finished Good in Assembly Entry.

To open Assembly Entry, follow these steps:
a. Click Transactions .
b.

Point to Inventory , and then click Assembly Entry .

During posting, the following transactions occur:

• The Finished Good inventory account is debited for $10.00.
• The Finished Good variance account is debited for $2.00.
• The Component Inventory account is credited for $12.00.