Calculate Variances Against

Select a base to calculate variances against. This parameter is system wide, applying to all jobs. It affects the way entries to WIP and variances are calculated as you post transactions against a job, which affects the size of the routing variance entries that occur when the job is closed.

• Actual: The system uses the rates, times, etc. from the job's operations and BOM to calculate WIP entries and to compare to actual for calculating variances.
• Standard: The system uses the rates, times, etc. from the item's standard operations and BOM to calculate WIP entries and to compare to actual for calculating variances.

Typically, you should set this parameter to Standard, because you will usually see more entries to specific variance accounts and much fewer entries to routing variance. If you set the parameter to Actual, the cost difference associated with the difference in rates and times between the standard and job routing will all end up in routing variance. With the parameter set to Standard, those differences will go to more specific variance accounts, such as labor rate variance, labor usage variance, and overhead usage variance.

See About Job WIP Costs for more information about job costs and variances.