Orlansoft released the Cost Component feature for a comprehensive cost variance analysis of factory overhead costs in February 2024

Cost variance is the discrepancy value between standard cost and actual cost. The actual cost is the cost value the company issued for each production cost component, for example, the actual cost of electrical energy per month and the actual cost of factory machine spare parts. Meanwhile, standard cost is the standard rate for production costs per hour (or standard purchase price) multiplied by production time in hours (or quantity of material) to produce product items in a certain amount.

For example, to produce 1,000 sachets of Product A101, you need:

1.	Material C105	: 10 kg x IDR 50.000	=	IDR	500.000
2.	Direct Labor 1 hour	: 1 person x 1 hour x IDR 25.000	=	IDR	25.000
3.	Factory Overhead Work Center A	: 1 hour x IDR 275.000	=	IDR	275.000
	Total Standard Cost of Product A101 for 1,000 sachets		=	IDR	800.000

An accurate cost variance analysis report is required to obtain information on whether:

• The actual production output quantity follows the production plan.
• The amount of waste (in value and qty) is still within tolerance limits.
• The average actual material price meets the budget (standard purchase price)

Factory companies with many types of products and the production process of each product item must go through several work centers; the company usually has several Factory Overhead / FOH Cost groups to analyze the cost variance for each FOH Cost group so that production process efficiency measurements can be more informative. (such as cost variance value of electrical energy, spare parts, supporting materials, etc).

Orlansoft Cost Component was released on February 2024 and helps the company with easy to:

• Determine one Cost Component ID for each FOH Cost group.
• Have a generated journal system and Factory Overhead cost variance for each FOH Cost group in the Cost Variance Analysis report.