# SAP Controlling FAQs – Variance Analysis

1.Â Â Â 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.Â It also provides vital information that can be used to modify and improve planning in subsequent periods.

2.Â Â Â All variances in SAP can be classified as what two types of variances?

â€¢Â Â Â Input Side Variance

â€¢Â Â Â Output Side Variance

3.Â Â Â True or False?Â In SAP, Variance analysis can only be done in plan version 0.

True.Â 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.Â Â Â What are four input side variances SAP can identify?

â€¢Â Â Â Price Variance

â€¢Â Â Â Quantity Variance

â€¢Â Â Â Resource Usage Variance

â€¢Â Â Â Input Variance

5.Â Â Â 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.Â Â Â Give a mathematical formula for Price Variance

(Planed Price — Actual Price) X Quantity Planed

7.Â Â Â 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.Â Â Â Give a mathematical formula for Quantity Variance

Planed Price XÂ (Planned Quantity- Actual Quantity)

9.Â Â Â 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.Â Â Â Give an example and a root cause for a Input Variance

Example:Â Cost element were planned and posted in actual, but no consumption quantities were recorded. Cause: Consumption quantity unknown during variance analysis.

11.Â Â Â What are the types of output side variances SAP can identify?

â€¢Â Â Â Output Price Variance

â€¢Â Â Â Volume Variance

â€¢Â Â Â Output Quantity Variance

â€¢Â Â Â Remaining Variance

12.Â Â Â What is the difference between an â€œOutput Price Varianceâ€ and a â€œPrice Varianceâ€ as defined in SAP?

â€¢Â Â Â Output Price Variance is an output side variance

â€¢Â Â Â Price Variance is an input side variance

13.Â Â Â Give an example and a root cause for a Volume Variance.

Example: 1000 man hours are planed for maintenance at 10 dollars.Â In actual 1100 hours of maintenance is produced by the maintenance cost center. Cause: Unforeseen requirement for additional maintenance.

14.Â Â Â What is the two step Process for calculating a Variance

Configuration

â€¢Â Â Â Create Variance Variant

â€¢Â Â Â Maintain Target Version

Execution

â€¢Â Â Â Enter Parameters

â€¢Â Â Â Execute Variance Calculation

â€¢Â Â Â Print Variance Report

15.Â Â Â How many variances can be activated by the user in the variance variants?

4 input and 3 output

16.Â Â Â 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.Â Â Â 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.Â Â Â What are some of the options available to fully relieve all remaining cost, after variances have been calculated and reported?

â€¢Â Â Â Sweep the remaining balance into another module (Such as PA) for further analysis

â€¢Â Â Â Perform additional allocations within CCA to move all variance amounts to one or more other cost centers

â€¢Â Â Â Perform an Actual Activity Price Calculation.

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