The Impact of Cost Category Price Update on Financial Voucher Transactions
Question
You have updated a cost category price from $5.00 to $7.00
You process a production order which uses the cost category.
After ending the order, you realize a new standard cost was not calculated after the price update.
You need to validate how this impacted the financial voucher transactions.
Which transaction would you see in the general ledger?
Answers
Explanations
Click on the arrows to vote for the correct answer
A. B. C. D.B.
References: https://docs.microsoft.com/en-us/dynamicsax-2012/appuser-itpro/about-analyzing-common-sources-of-production-variances.
When a production order is processed in Dynamics 365 Supply Chain Management, the system uses the cost categories to calculate the cost of the finished product. The cost categories are defined based on various parameters such as materials, labor, and overheads. The cost of each component is maintained in the system, and the system uses this information to calculate the cost of the finished product.
In this scenario, the cost category price was updated from $5.00 to $7.00, and a production order was processed using the cost category. However, after ending the order, it was realized that a new standard cost was not calculated after the price update. As a result, the financial voucher transactions need to be validated to understand the impact of this on the general ledger.
The standard cost of a finished product is the total cost of all components required to manufacture the finished product. In this case, the standard cost was not updated after the cost category price was changed. Therefore, the actual cost of the finished product would be different from the standard cost. This would result in a variance in the production cost, which would need to be accounted for in the financial voucher transactions.
The production cost variance account is used to record any variances between the actual production cost and the standard production cost. In this scenario, the variance is due to the difference between the updated cost category price and the old standard cost. Therefore, the transaction that would be seen in the general ledger would be a $2.00 debit to the production price variance account (Option A). This would indicate that the actual production cost was $2.00 more than the standard production cost due to the price update.
Option B, a $2.00 credit to the production price variance account, would not be the correct answer, as a credit would indicate that the actual production cost was less than the standard production cost, which is not the case here.
Option C, a $2.00 debit to the production quantity variance account, would also not be correct, as this account is used to record variances due to differences in the quantity of materials used in production.
Option D, a $2.00 credit to the lot size variance account, would also not be correct, as this account is used to record variances due to differences in the lot size used in production.
