Setting Up Cost Variance Analysis in SyteLine
Cost variance analysis in SyteLine compares actual production costs against standard or estimated costs to identify inefficiencies in material usage, labor productivity, and overhead absorption. For standard cost manufacturers, variance analysis is the primary mechanism for understanding where margins leak. Proper configuration of variance accounts, cost rollup parameters, and reporting dimensions ensures variances are captured, categorized, and actionable rather than buried in aggregate GL postings.
Variance Account and Production Code Setup
SyteLine recognizes five primary variance categories when closing jobs against standard cost: material price variance, material usage variance, labor rate variance, labor efficiency variance, and overhead spending variance. Each variance type posts to a separate GL account defined in the Production Codes form (Costing > Production Codes). The production code assigned to each item or job determines which GL accounts receive variance postings at job close. Missing or incorrectly mapped variance accounts cause the Close Job utility to fail or post variances to a catch-all account that destroys analytical visibility.
- Define separate GL accounts for each variance type in the Production Codes form: MPV, MUV, LRV, LEV, and OV
- Assign production codes to items in the Item form or to jobs in the Job Orders form for variance account routing
- Configure the material price variance account to capture differences between PO cost and standard cost at receipt
- Set the material usage variance account for quantity differences between BOM standard and actual job issues
- Map overhead variance accounts for the difference between absorbed overhead (rate x actual hours) and actual overhead spent
Standard Cost Rollup and Baseline Configuration
Accurate variance analysis depends on a properly executed cost rollup that establishes the standard cost baseline. The Cost Rollup utility (Costing > Cost Rollup) calculates standard material, labor, and overhead costs by exploding BOMs and routings from the lowest level to the top. Running the rollup with incorrect BOM quantities, outdated routing times, or stale overhead rates embeds errors into the standard that corrupt every subsequent variance calculation. The rollup should be executed annually or when significant rate changes occur, with the Pending Cost vs. Current Cost comparison reviewed before freezing new standards.
- Run the Cost Rollup utility from Costing > Cost Rollup selecting the appropriate cost method and effective date
- Review the Pending vs. Current Cost Comparison report to identify significant standard cost changes before freezing
- Validate BOM quantities and routing operation times are current before initiating the rollup calculation
- Update overhead rates in the Work Center form to reflect current budget-based absorption rates before rollup
- Freeze pending costs to current using the Update Item Cost utility only after approval from cost accounting
Variance Reporting and Root Cause Investigation
SyteLine provides several standard reports for variance analysis: the Job Cost Variance report breaks variances by job, cost element, and variance type. The Variance by Item report aggregates variances across all jobs for a given item, revealing systemic costing problems versus one-time occurrences. For root cause investigation, drill from the variance report into Job Transactions to see the individual postings that created the variance. Material price variances trace back to PO receipts; usage variances trace to material issue quantities versus BOM; labor variances trace to clock-in/clock-out records versus routing standards.
- Run the Job Cost Variance report (Reports > Costing > Job Cost Variance) filtered by period, item, or production code
- Use the Variance by Item report to identify items with persistent variances indicating stale standards or process issues
- Drill into material price variance by comparing SLMatTrans.unit_cost against SLItemCost.matl_cost for specific receipts
- Investigate labor efficiency variance by comparing actual operation hours in SLJobRouteOper against routing standard hours
- Build a monthly variance trend report in SSRS or Report Builder to track improvement or deterioration over time
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Related Resources
SyteLine Job Costing Configuration Guide
Configure job costing in Infor SyteLine with material, labor, overhead, and outside process cost elements. Complete setup guide for ETO and MTO manufacturers.
Infor SyteLineSyteLine WIP Valuation Methods Guide
Compare WIP valuation methods in Infor SyteLine including actual, standard, average, and FIFO. Configure the right approach for your manufacturing cost model.
Infor SyteLineSyteLine Overhead Allocation Methods Guide
Configure overhead allocation methods in Infor SyteLine including fixed, variable, and activity-based approaches. Set up absorption rates by work center and cost pool.