The variance calculation compares the actual costs incurred for the run schedule header in the respective period with the target costs. To do this, it uses the standard cost estimate for finished material and assigns the individual variances to variance categories. The base quantity is the quantity delivered to stock in the period concerned.

The flow of values is structured as follows:

• When the standard cost estimate for a material is released, the price calculated by the standard cost estimate is transferred to the material master record of the material to be produced as the standard price. In this process, we assume that this has already occurred.
• If the transfer of the finished product to stock is calculated using the standard price (as determined by the standard cost estimate), the difference between the actual costs of the run schedule header and the target costs determined for the individual periods using the standard cost estimate corresponds to the order balance - provided the finished products have been delivered, but the run schedule headers have not been settled yet.

In the variance calculation, you determine

• The amount of the variance
• The reason for the variance (for example, price changes, changes in the lot sizes, changes in the input quantity)

When the variances have been determined, the WIP and scrap amounts are deducted from the difference between the actual and target costs. This ensures that

• Only actual variances are determined.

The variances are not distorted by the value of the WIP and the scrap distributed to the delivered materials.