Material Overhead and Purchase Price Variance

Hi

We are getting PPV account whenever PO and Item cost same. We are using costing method as Standard cost and using 5 elements like Material, Material Overhead, Resource, Overhead and OSP.

For an instance,

Material : $5

Material Overhead $3

Resource $2

Overhead $ 1

Therefore, total cost is $11. I created a PO price as  $11 and Qty 100, received the same.

In PO delivery, system creating accounting as below.

             Dr                                                                                                  CR           

Inv valuation for material                 500                          Receiving Inventory Account               1100

Inv Valudation for Material                                               Material Overhead

Overhead                                      300                           Absorption Account                            300

Inv Valuation for Resource               200

Inv Valuation for Overhead               100

Purchase Price Variance                 300

Here, system creates Purchase Price Variance which is equivalent to Material Overhead Account.