What is efficiency variance in SAP CO-PC - Product Cost Controlling?

SAP Term: efficiency variance

• Component: CO-PC

• Component Name: Product Cost Controlling

• Description: Variance that occurs when the realized intensity changes against the planned intensity. &EXAMPLE& If actual production is quicker than planned, then the budgeted cost changes accordingly. This change causes an efficiency variance on the cost center or on the order.

Smart SAP Assistant

• Key Concepts: 
  Efficiency variance is a term used in SAP's CO-PC Product Cost Controlling component. It is a measure of the difference between the actual cost of production and the standard cost of production. It is calculated by subtracting the standard cost from the actual cost. A positive efficiency variance indicates that the actual cost was lower than the standard cost, while a negative efficiency variance indicates that the actual cost was higher than the standard cost. 
  
  How to use it: 
  Efficiency variance can be used to measure the performance of a production process. It can be used to identify areas where costs can be reduced or where processes can be improved. It can also be used to compare different production processes and identify which one is more efficient. 
  
  Tips & Tricks: 
  When calculating efficiency variance, it is important to ensure that all costs are taken into account, including labor, materials, and overhead costs. Additionally, it is important to ensure that all costs are calculated using the same currency and time period. 
  
  Related Information: 
  Efficiency variance is closely related to other terms such as standard cost, actual cost, and budgeted cost. Additionally, it is related to other concepts such as process improvement and cost reduction.