SAP CO: Production VARIANCE ANALYSIS in S/4 HANA 1909




SAP CO: Production VARIANCE ANALYSIS in S/4 HANA 1909

Production Variance Analysis is most important and need to analyze for every manufacturing industry sectors to cost control.


Variance Categories

The variances are assigned to variance categories in the following sequence:

Input Side Variances

  1. Input price variance

  2. Input quantity variance

  3. Resource-usage variance

  4. Remaining input variance

Output Side Variances

  1. Mixed-price variance

  2. Output price variance

  3. Lot size variance

  4. Remaining variance

Scarp Variance:

Assembly Scrap:

Operation Scrap

Component Scrap

Input Side Variances

Variances reported on the input side of manufacturing orders from production transactions like goods issue, confirmation of order etc.

• Input Price Variance

Input price variance occurs because of changes in prices which is planned price and actual price.

• Input Quantity Variance

Input quantity variance occurs because of difference between the planned and actual quantity and activities consumed.

• Resource Usage Variance

This kind of variance generally occurs when the substitute component is used instead of planned one.

When the planned material is not and alternate material is used in production process the resource usage variance is seen because of cost difference of both materials.

• Remaining Input Variance

When available variance on order is not possible to assign to any of the categories above mentioned system treats this as a remaining input variance.

The possible reason to get the remaining input variance is overheads rates are changed meanwhile.

Output Side Variances

• Output Price Variance

The output price variance occurs because if standard price is changed after the credit posted to stock and before calculation of variances on production order.

.• Mixed Price Variance

Mixed price variance occurs when material is valuated based on using mix cost estimate. The target cost of credit in this case is dependent on confirmed quantity of standard cost from procurement alternative and actual cost is depend on actual quantity confirmed on standard price.

• Lot Size Variance

The lot size variance arises due the difference between the lot size used in manufacturing order and lot size at the time of standard cost estimate.

• Remaining Variance

Remaining variances occurs on order when system is not able to assign variance to any categories.

Remaining variance also considered when target cost of the material is not present in system as like when standard cost estimate does not available in system or goods receipt against a production order has not been performed.

SAP CO : Variance analysis (Input Side & Output Side variances),Scrap Variance with Product Costing in S/4 HANA 1909

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What you will learn
  • SAP CO: Production VARIANCE ANALYSIS in S/4 HANA 1909

Rating: 4.9

Level: Expert Level

Duration: 9 hours

Instructor: Karanam Sreedhar


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