You typically retrieve the standard price for purchased materials from purchasing info records during a costing run. Purchasing info records store vendor quotations per material and represent an estimate of plan purchase price.
When you purchase materials valued at standard price, you post a purchase price variance (PPV) during goods and invoice receipt if the actual purchase price is different from the material standard price. Since PPV represents the difference between plan and actual purchase price you can use it as a measure of your purchasing department performance. You may have Purchasing analyze and explain an increase in unfavorable PPV postings at period-end. You can easily analyze PPV postings if you nominate the purchasing cost center as the receiving cost object for PPV expense account postings and then run a standard cost center report. Let me show you how.
You assign the purchasing cost center as the the default for PPV with Transaction OKB9 or by following IMG menu path:
Controlling • Cost Center Accounting • Actual Postings • Manual Actual Postings • Edit Automatic Account Assignment
You see the screen shown in Figure 1 displayed.
Figure 1: Default Account Assignment Configuration
You're presented with a list of existing cost center assignments to cost elements, which in this case equate to general ledger accounts. To assign a default cost center to the PPV cost element, click the New Entries button and enter the company code, cost element and cost center, and Save. To enter a different default cost center per plant select the cost element in Figure 1 and double-click the Detail per business area/valuation area text.
View the standard actual/plan cost center report with Transaction S_ALR_87013611 or by following menu path:
Accounting • Controlling • Cost Center Accounting • Information System • Reports for Cost Center Accounting • Plan/Actual Comparisons • Cost Centers: Actual/Plan/Variance
Enter the selection screen information and click the execute icon to display the screen shown in Figure 2.
Figure 2: Cost Center Report Results Screen
You can assign PPV postings to separate Favorable and Unfavorable accounts with Transaction OBYC to gain more transparency of PPV postings in this report than if you display just the total Debit balance in one account. Double-click a PPV cost element in Figure 2 and press [Enter] to display a line item report of individual postings to this account as shown in Figure 3
Figure 3: Cost Center Actual Line Items Report
You can sort the Val.in RC (value in reporting currency) column to highlight the largest PPV postings. By double-clicking any line shown in Figure 3 you can drill down and analyze the transaction that caused the PPV posting.
Responsibility based reporting is one of your most important available standard tools available with SAP. Assigning PPV to the purchasing cost center is just one of many examples of assigning responsibility and providing reporting and analysis through the use of standard reports.