PPV: Purchasing Price Variance in SAP

Overview

Aim of this document is to show how price variance is calculated in a context of standard cost.

Standard cost, is a agreement between Engineering and Finance areas, regarding the price of raw materials and operative supplies, this estimated price is a key input to calculate gross margins.

PPV impact on Gross Margin

The Purchasing Price Variance or PPV is a warning flag that says that the gross margin will have variance, taking care about the situation, on a nimble way, enable the organization to keep margins going forward.

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