First, it means that the WIP account is proplery address AFTER all kits are closed, and GL records are released and posted.

When there is a cost adjustment while there are components in WIP, the value of the WIP account is not updated until the kits are closed. Then, the WIP value is updated, but erroneously attributed to manufacturing variance instead of cost adjustment.

So, making major cost adjustments when there is a large amount of affected inventory in wip will result in major discrepancies in the reported WIP VALUE from the Production reports and the WIP account value in accounting. When all kits so affected are closed, the discrepancy will be corrected. Put another way, the Production WIP VALUE is calculated on the current inventory in kits (by calculating the remaining assemblies in the kit, extending the QPA for each component based on the current BOM, subtracting any shortages and extending by the CURRENT Standard cost per component) and the GL reports are based on the value at the time of issue to the kit.

At the time this happens, (when the kit is closed) the value of all items issued to the kit is totaled and compared to the value of the totaled BOM component cost for the assemblies completed at the time of the kit closing.. The difference is currently logged as a manufacturing variance.

To validate the standard cost of the items issued in the INVT_ISU records with the current standard costs, system will total that value, and subtract it from the total manufacturing variance for each work order.  Then the true manufacturing variance should be realized, and the difference due to standard cost changes posted at the same time to the inventory adjustment account. Then, the total of the manufacturing variance and the total of the cost adjustment change should add up to the total difference between what was actually issued to WIP and what should have been issued to WIP (via the BOM).

bld qty = 100