When you have a variance cost but not by item quantity or the variance by cost is much greater or less than the variance by item – Why?
This is caused by a price change of an item, resulting in the opening stock and closing stock being valued at different amount for that item.
Prices can be amended by the stock administrator, or by the user by updating the price on the delivery (by permission only)
Example:
Below I have a positive variance however my variance cost is -£38.61. How is this calculated?
Use the Closing Stock Variance Report to note down the opening and closing stock by Quantity.
Opening Stock = 0.00 Closing Stock = 82.00
User the Stock Result Details Report to note down the opening and closing stock by Cost.
Opening Stock = £0.00 Closing Stock = £76.42
Now work out the cost per each Burger Patty for the opening and closing stock amounts:
Opening Stock = £0.00/0 = £0.00 per each
Closing Stock = £76.42/82 = £0.932
This report also shows the actual cost of the item: Cost = £306.46
£0.00 (Opening stock) + £382.88 (Deliveries) - £76.42 (Closing Stock) = £306.46
Use the Cost Variance by Item report to see the variance by cost:
Theoretical cost/Sales = £0.78 valued at an each.
The difference between the Actual and Theoretical is -£38.61 which values the burger patty for less than its cost.