Representative engagement
Making standard cost variances explainable
The situation
Every month-end turned up large production variances that nobody could explain. Finance didn't trust the cost roll, the plant didn't trust finance's numbers, and the close took longer each quarter.
What we did
- Rebuilt multi-level BOMs and routings so they matched how product is actually made on the floor, including yield and scrap
- Reset the standard cost rollup process and the timing of cost revaluations
- Mapped variance accounts by type (material, labor, overhead, yield) instead of one catch-all
- Built saved searches that trace variance back to the individual work order and component
What changed
Variances became something the team could explain by cause, not just absorb. Plant and finance worked from the same numbers, and the costing review turned into a short, routine step in the close.