# 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.

## 1 thought on “SAP Controlling FAQs – Variance Analysis”

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