Exercise 6: Material Variances Multi-Site Issue

Another site in the company has gotten a discount by buying Probe Housings, 60009 in large quantity. They have agreed to let us use some.

1 Use Issues Unplanned (3.9) to receive 50 of the 60009 Probe Housings into site 10-200 location 020. You will need to change the default site code.

2 Use Item Site Cost Maintenance (1.4.18) to set both the GL and current cost of the 60009 at site 10-200 to 25.00.

3 Create and release an order for 1 of the 01020 at site 10-100. Issue the components changing the site from which the 60009 is issued to 10-200.

4 Receive the work order and close it, and run work order accounting close. Review the work order cost report. What does it report? The work order cost report indicates that everything happened exactly at standard. This is because all transactions were booked at site 10-100 GL costs.

However if your look at Transaction Detail (3.21.1) you will find on the RCT-TR (receipt from transfer) a debit to transfer variance (6820) of 25.00 and a credit of 30.00, leaving a 5.00 credit balance in transfer variance (-5.00) or favorable. Remember any variance on a transfer accrues to the receiving site. The logic here is that from the viewpoint of site 10-100 they received an item worth 30.00 for only 25.00. It is important to keep in mind these are just inventory transactions and have nothing to do with currency changing hands.