Overhead Reversal for Work Order Returns

Hello all,

We are using Standard Costing, where the Valuation Structure is Cost Org + Inv Org (there are multiple VUs, one per inventory organization).

We have Overheads being applied via the Manage Overhead Rates UI, where the Overhead Rate Type is set to Plant overhead, and it's also set per Item.

The OH is being applied at the Work in Process Product Completion level, as designed.

When we do a Work Order Product Return transaction (we reverse the Input Materials, the Product and the Resources), Oracle creates a Cost Variance costing distribution line, with the Cost Element Type as Overhead, and we do not understand why. No OH rate changes took place between the completion and the issue transactions, and the same quantity that was originally used within the Work Order is the same quantity that was reversed: