Scenario
Standard Cost Variance for Phantom Sub Assemblies
Solution
- If a Sub Assembly that is included in the BOM of the final Assembly is marked as Phantom, no Work Order is created for the Sub Assembly from the Top Level Work Order, only the components of the Sub Assembly are added on this order
- Since there is no cost to make the Sub Assembly, the system posts a positive Quantity Variance based on the cost of making the Sub Assembly
- A corresponding negative Price Variance is created for the components of the Sub Assembly that are added to the main Work Order
Note: The total variance for the Work Order becomes zero because the positive and negative variances offset each other