SAP Note 20217 - Remaining variance for materials .

Symptom

For a material with excess consumption or under-consumption, when calculating variances for production orders or cost object IDs, either

1. a quantity variance different than what was expected is calculated, or

2. an input variance or a remaining variance is calculated instead of a quantity variance.

Transactions: KKS1, KKS2, KKS3, KKP5
Programs: SAPMKKS0, SAPMKKP2

Cause and prerequisites

Quantities and costs for orders are not updated separately for individual materials but summarized on cost element and origin group (origin). This leads to mixed variances. Example:
It is assumed that the planned output quantity and the yield are the same, and therefore plan equals target.
Cost elem. Mat. number Target qty Target costs Act.qty Act.costs 400000 M1 10 KG USD 10 11 KG USD 11
400000 M2 20 KG USD 2000 20 KG USD 2000
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400000 Materials total 30 KG USD 2010 31 KG USD 2011

1. The quantity variance is equal to (actual quantity - target quantity) * planned price.

The planned price is calculated as target costs / target quantity. In the example, material M1 has a planned price of USD 1. This results in a quantity variance of (11 KG - 10 KG) * USD 1 = USD +1. However, since the costs/quantities are not available for the individual material in the order, as described above, the calculation is made with the totals for the cost element. The following applies in this case: planned price for cost element 400000: USD 2010 / 30 KG = USD 67. The quantity variance equals (31 KG - 30 KG) * USD 67 = USD +67.

The actual price equals actual costs / actual quantity, in the example, USD 2011 / 31 KG = USD 64.87. The price variance equals (actual price - planned price ) * actual quantity, thus (USD 64.87 - USD 67) * 31 KG = USD -66.

2. If the materials have units of measure that cannot be added, the cost element has no quantity. As a result you can neither calculate the planned price nor the quantity variance and price variance. Instead, a remaining variance is calculated (in the example: USD 2011 - USD 2010 = USD +1).

3. If the "Manage quantities" indicator is deselected in the cost element master for the material cost element, or if a different unit of measure is defined here than for the material, no quantities are updated in the plan and actual. Then only a remaining variance is calculated here as well.

Solution

1. and 2.
In Releases 2.1 and 2.2, the data can be updated on the lowest level on cost element and origin group. The origin group is defined in Customizing and assigned to the material in the material master. If another origin group is assigned to each material, the data is updated as precisely as possible. You can also create larger groups of materials with the same unit of measure, or assign origin groups only for important (valuable) materials.
In Release 3.0 you can additionally update costs and quantities under the material number, if necessary. Therefore you need to select the "Material origin" field in the material master. The quantity will then always be updated in the consumption unit of the material.

1. Select the "Manage quantities" indicator in the material master and enter an appropriate unit of measure. Caution: This change only applies to production orders and product cost estimates created after this change; existing cost estimates are not affected.

In Release 3.0, the quantities and units of measure are always updated if they can be totalled. The indicators in the cost element master then have no influence.
In Release 3.0, an input variance is calculated in the above cases instead of a remaining variance.
The use of origin groups and material origin leads to an increased dataset and to longer runtimes during period-end closing. Its use should therefore be restricted to important (valuable) materials.
For information on the calculation of resource-usage variances, see Note 23617.