Managing inventory in Luminous involves syncing your physical warehouse activity with your financial records. One of the key components in this process is Variance Cost Layers—a built-in system that ensures accuracy between your actual inventory counts and the recorded financial inventory. This article breaks down what variance cost layers are, how they’re generated, and what they mean for your reporting.
What Are Cost Layers?
In Luminous, a cost layer represents a batch of inventory items received at a specific unit cost. For example:
You receive 200 units at $3.00/unit
Luminous records this as:
Warehouse Inventory: 200 units
Financial Inventory: 200 units at $3 = $600
This becomes your initial cost layer.
How Cost Layers Track Inventory
Luminous tracks inventory in two parallel systems:
Warehouse Inventory: What’s physically in your bins
Financial Inventory (Cost Layers): How the cost of that inventory is accounted for
Let’s walk through a basic flow.
Sales & Discrepancies
Step 1: Sales Begin
You sell some items, and your inventory reduces:
Warehouse: 190 units left
Financial Cost Layer: 100 units left at $3 (from the original 200)
Step 2: Warehouse Count Shows a Discrepancy
You do a physical count and find only 188 units in your warehouse. That’s 2 units short of what Luminous expects.
If you're integrated with a WMS, this may auto-update with a stock pull transaction.
How Variance Cost Layers Are Created
To resolve this mismatch:
Luminous maintains the financial cost layer at 190 units @ $3
But it logs a variance cost layer:
Quantity: -2 units
Cost/Unit: $0.00
Label:
Variance
This variance layer reflects the missing units that aren’t physically accounted for, but are still on the books.
Receiving New Inventory
Next, you receive:
200 new units at $2.00/unit
Your financial inventory now includes:
190 units @ $3 (old layer)
200 units @ $2 (new layer)
-2 units @ $0 (variance layer)
Your system says you have 388 units total. But what happens when you sync again?
Inventory Syncing & Warehouse Timing
Let’s say after syncing, your physical warehouse still shows only 188 units.
Even though you've submitted the receiving report for the new 200 units, if your warehouse hasn't physically received or allocated them yet, the inventory count won’t reflect them.
Luminous will then:
Keep financial records intact
Update warehouse count based on the latest physical data
Expand variance: Now, instead of 2 units, you might see a 202-unit variance (390 expected - 188 actual)
This temporary mismatch reflects real-world warehouse processes lagging behind financial inputs.
Resolving Variance & Reporting Defectives
Once your warehouse team completes the receiving process and the inventory syncs properly:
The warehouse inventory will update (e.g., back to 388 units)
The system reconciles the variance automatically
If units are permanently lost or damaged, you should:
File a Defective Report in Luminous
This ensures those units are accounted for outside of active inventory and removed from financial cost layers appropriately
Why This Matters
Variance cost layers help explain:
Why your financial inventory might not match your physical inventory
Why you might see zero-cost units logged in cost layers
How to interpret mismatches and resolve them effectively
This system ensures that your accounting stays accurate even when real-world warehouse events don’t line up perfectly with your digital records.
Still Have Questions?
If you're seeing discrepancies you can’t explain—or need help interpreting your cost layers—reach out to our support team. We’re here to help, and if necessary, we’ll loop in our developers to investigate further.