SAP Controlling FAQs – Variance Analysis

1.    What is the purpose of variance analysis?
Variance analysis is used to calculate and interpret differences between planned costs and actual cost within a cost center or cost center group.  It also provides vital information that can be used to modify and improve planning in subsequent periods.

2.    All variances in SAP can be classified as what two types of variances?
•    Input Side Variance
•    Output Side Variance
3.    True or False?  In SAP, Variance analysis can only be done in plan version 0.
True.  Variance analysis can only be done in plan version 0; because, plan version 0 is the only planning version that can have actuals posted to it.

4.    What are four input side variances SAP can identify?
•    Price Variance
•    Quantity Variance
•    Resource Usage Variance
•    Input Variance

5.    Give an example and a root cause for a Price Variance.
Example: Wage increase from 12.00 to 12.50 an hour. Cause: Cost of living adjustment not accounted for in planning wages.

6.    Give a mathematical formula for Price Variance
(Planed Price — Actual Price) X Quantity Planed

7.    Give an example and a root cause for a Quantity Variance.
Example: Reduction in the hours it takes to produce a widget. Cause: Productivity increase not planned due to PwC reengineering efforts that exceeding company’s expectations.

8.    Give a mathematical formula for Quantity Variance
Planed Price X  (Planned Quantity- Actual Quantity)

9.    Give an example and a root cause for a Resource Usage Variance
Example: Cost Element posted to wrong Cost Center. Cause: Error in planning or actual posting.

10.    Give an example and a root cause for a Input Variance
Example:  Cost element were planned and posted in actual, but no consumption quantities were recorded. Cause: Consumption quantity unknown during variance analysis.

11.    What are the types of output side variances SAP can identify?
•    Output Price Variance
•    Volume Variance
•    Output Quantity Variance
•    Remaining Variance

12.    What is the difference between an “Output Price Variance” and a “Price Variance” as defined in SAP?
•    Output Price Variance is an output side variance
•    Price Variance is an input side variance

13.    Give an example and a root cause for a Volume Variance.
Example: 1000 man hours are planed for maintenance at 10 dollars.  In actual 1100 hours of maintenance is produced by the maintenance cost center. Cause: Unforeseen requirement for additional maintenance.

14.    What is the two step Process for calculating a Variance
•    Create Variance Variant
•    Maintain Target Version
•    Enter Parameters
•    Execute Variance Calculation
•    Print Variance Report

15.    How many variances can be activated by the user in the variance variants?
4 input and 3 output

16.    What is the purpose of the Variance Variant?
It indicates to the system which variance the system should attempt to calculate and identify during execution of the variance calculations

17.    How can additional information be obtained on the cause of a variance, After running a Variance Report?
The drill-down function may be used for each line item

18.    What are some of the options available to fully relieve all remaining cost, after variances have been calculated and reported?
•    Sweep the remaining balance into another module (Such as PA) for further analysis
•    Perform additional allocations within CCA to move all variance amounts to one or more other cost centers
•    Perform an Actual Activity Price Calculation.