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How to avoid Cost Variance during WIP Product Return

Summary:

Customer is producing same item in three plants. The cost of production is different in all three plants (due to changes in resource rates and overheads).

Cost are as follows:

  1. Plant A- 1 USD
  2. Plant B - 2 USD
  3. Plant C - 3 USD

The cost is tracked at cost organization level, which is same for all plants. Hence now the average cost of item is around 2.2 USD. We have done a WIP Product return transaction in plant C. The production was done at 3 USD, return done at the 2.2 USD, leading to cost variance account being hit. Customer wants to avoid the cost variance, as the WIP Product return can be done even in cases, where the WIP Production Completion was done by mistake (Like wrong qty, or lot number during WIP completion).

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