The logic of threshold value checks is explained in the following example.

100 bars of chocolate are produced. The standard price of a bar is USD 2. Single-level and multilevel price differences appear during production that are settled to the chocolate.

The threshold values amount to 20% for the periodic unit price variance and 20% for the multilevel variances.

The comparison price is the standard price.

Multilevel Variances: Only the multilevel differences related to the quantity procured on a multilevel basis and the comparison price (in this case, the comparison price is the standard price) are included.

Percentage variance =

(Multilevel differences * 100%)/(Quantity procured on a multilevel basis * Standard price) = 16.67% (see 1)

Here, the threshold is not exceeded.

Variance of the periodic unit price: The recalculated price is compared with the comparison price (in this case, the standard price).

Percentage variance =

(Recalculated price - Standard price)*100%/Standard price = 25% (see 2)

Here, the threshold is exceeded.