Manufacturing Costing and Variance

Manufacturing costing in Udyot tells you whether your products cost what you expected. It compares the standard cost you planned against the actual weighted-average cost, and lets you absorb factory overhead into finished goods so your margins reflect the true cost of production.

Standard cost variance

Each product carries a standard cost — set automatically from the rolled-up cost on every Manufacturing Journal. The Standard Cost Variance report (Manufacturing → Standard Cost Variance) compares that standard to the current weighted-average from stock and flags each item:

Favourable — actual cost is more than 5% below standard.
On target — within 5%.
Unfavourable — actual cost is more than 5% above standard.

Items are sorted by the biggest deviation first, so you see the costliest surprises at the top.

Overhead absorption

If you enable overhead absorption, finished goods absorb labour and factory overhead from the routing when you post production — so inventory carries its full cost (NAS 2 / IAS 2 §10). Actual overheads (rent, electricity, depreciation) are tagged as factory overhead through the year, and the Variance report shows the difference between overhead absorbed and overhead actually incurred — month by month — so you can see whether you over- or under-applied.

Tips & common questions

What is “absorbed vs actual” variance? Absorbed is the overhead added to products as you produced; actual is what you really spent. A favourable variance means you applied more than you spent; unfavourable means you spent more than you applied.

Does overhead absorption change my profit? It moves the timing — overhead sits in inventory until the goods are sold, then flows to cost of goods sold. It is reconciled at period close.

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