SAP CO Production VARIANCE ANALYSIS in S4 HANA
What you’ll learn
SAP CO: Production VARIANCE ANALYSIS in S/4 HANA 1909
Requirements
SAP FI & CO modules are required.
Description
Variance analysis is a critical component of controlling in the manufacturing sector, as it highlights the deviations between the planned (or standard) and the actual outcomes, which then informs management decisions.Let’s delve into the nuances of these variance categories for a better understanding:Input Side Variances:1. Input Price Variance:This is the difference between the standard cost and the actual cost of inputs.For instance, if a company planned to purchase raw material at 10 per unit but actually purchased it at 11 per unit, this leads to a price variance.2. Input Quantity Variance:It’s the difference between the standard quantity and the actual quantity used.If a company planned to use 50 units of a raw material but ended up using 52 units, this will result in a quantity variance.3. Resource-Usage Variance:This arises when alternative resources are used instead of the ones originally planned.For instance, using a higher-grade material instead of a standard one can lead to this variance. It’s essentially the difference in cost between the actual resource used and the planned one.4. Remaining Input Variance:Any variance that cannot be attributed to the previously mentioned categories falls under this. Overhead rate changes during the production cycle are common culprits.Output Side Variances:1. Output Price Variance:This arises from the difference between the actual selling price and the standard selling price of the finished product.2. Mixed Price Variance:In scenarios where materials are valuated using a mixed cost estimate, any difference between the standard cost (derived from a standard mix) and the actual cost (resulting from an actual mix) leads to this variance.3. Lot Size Variance:Differences between the actual batch size or lot size used in manufacturing and the lot size considered during standard costing lead to this variance. This is crucial because certain costs might be fixed per batch, and deviations in batch sizes can lead to cost discrepancies.4. Remaining Variance:This is a catch-all category for variances that don’t fit into any other specified category. A common reason for such a variance is the absence of a target cost for the material, which can arise if a standard cost estimate is unavailable or if there’s been no goods receipt against a production order.Scrap Variances:In manufacturing, scrap refers to the portion of a raw material or semi-finished goods that, due to defects or inefficiencies during the production process, doesn’t end up as a part of the final product. Understanding the sources and reasons for scrap is vital to optimize production processes, minimize waste, and control costs. Scrap variances help pinpoint where in the process the wastage is happening and how it might be minimized.1. Assembly Scrap:Definition:Assembly scrap pertains to the waste or defects that occur during the main assembly process. This is when different components or materials are being assembled to form the final product or a significant subassembly.2. Operation Scrap:Definition:Operation scrap refers to the waste that happens at a specific operation or stage in the manufacturing process, well before the assembly.3. Component Scrap:Definition:Component scrap is related to the waste of specific components or parts used in the production process. This isn’t necessarily about a stage in the process but is about defective parts.In Conclusion: Variance analysis is crucial in manufacturing to pinpoint areas of inefficiency or unforeseen changes. By understanding where and why variances occur, companies can adjust their operations accordingly, resulting in better cost management and profitability. However, the key is not just to identify but also to act upon these variances by taking corrective measures
Overview
Section 1: Introduction of Production Variances categories
Lecture 1 Introduction of Production Variances categories
Section 2: Company code, Controlling Area and FI-MM(OBYC) Integration settings with GL
Lecture 2 Organization/Enterprise Structure Configuration
Lecture 3 Financial Accounting Settings
Lecture 4 Controlling Area creation and It’s settings
Lecture 5 GL accounts creation and OBYC-FI-MM Integration and Business partner creation
Section 3: Basic Product costing configuration settings
Lecture 6 Costing Sheet Design for Factory OH calculation
Lecture 7 Cost Component Structure-OKTZ-Configuration Settings
Lecture 8 Costing Variants-Standard Cost PPC1-Preliminary Cost PPP1-Simultaneous Cost PPP2
Lecture 9 Variance Calculation and Settlement Configuration settings
Lecture 10 Splitting Structure mapping for Cost elements to Activity types
Lecture 11 KP06-KP26-KSS4 and KSPI Transactions for “Activity Type rate” calculation
Section 4: Material Ledger Configuration
Lecture 12 Material Ledger Configuration
Section 5: 1. Input Side Variances – Production Variances
Lecture 13 Input Price Variance- Through Material
Lecture 14 Input Price Variance – Through Activity Type
Lecture 15 Input Quantity Variance- Through Material
Lecture 16 Input Quantity Variance- Through Activity type
Lecture 17 Resource Usage Variance
Lecture 18 Remaining Input Variance
Section 6: 2. Outside Side Variances – Production Variances
Lecture 19 Lot size/Fixed cost variances
Lecture 20 Mixed Price Variance
Lecture 21 Remaining variance
Lecture 22 Output Price Variances
Section 7: Scarp Variance
Lecture 23 Assembly scrap
Lecture 24 Operation scrap
Lecture 25 Component scrap
CPA , CMA , ACCA , CA , MBA , M Com,B Com students and Professionals, SAP FICO Consultants and End Users.
Course Information:
Udemy | English | 8h 46m | 3.31 GB
Created by: Karanam Sreedhar : SAP S/4 HANA Controlling-Solution Architect
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