WIP Material Cost Revaluation
In a standard cost environment, GL standards are reset on a periodic basis, often once a year. When the standard cost has been changed after the BOM and routing have been attached to a work order, WIP Material Cost Revaluation (16.22) is used to:
• Update the cost of unissued components on the work order bill
No rate variance will be calculated
• Update the WIP value of issued components
Rate variances will be calculated if the material has been issued prior to running the WIP Material Cost Revaluation (16.22)
Note: This variance is not a purchase price variance. That variance between the PO and GL cost is posted to the Purchase Price Variance account.
Once done, a WIP Material Cost Revaluation (16.22) cannot be undone.
WIP Material Cost Revaluation: Transactions Detail
WIP Material Cost Revaluation (16.22) updates the work order bill with the currently effective standard GL cost. For material that has been issued prior to running the WIP Material Cost Revaluation any difference between the component issue unit cost and the standard cost is posted as a material rate variance.
WIP Material Cost Revaluation does not update product structures or labor and burden costs.
In this example the purchase material cost of the 60012 electrode has gone up from 0.13 to 0.15. There is an open order for 100 of the 50010 acoustic transducer which uses 6 each of the 60012. After the standards change the WIP revaluation is run to up date the WO cost the difference between the old standard and the new. The calculation is:
(new cost - old cost) * quantity in WIP
0.15 - 0.13 * 600 = 12
GL Effect
Debits the WIP account from the work order and credits the Material Rate Variance account found on the work order parent’s product line record.
