Use

The output side consists of all the credits for a cost center or business process that are due to activity allocations. On the output side, the system compares the allocated actual costs with the target costs or plan costs . The output side variance categories include:

Features

Output Price Variance

An output price variance occurs if you use a price that differs from the plan price, which is calculated iteratively each month, based on plan activity. The target credit posting (= plan price x actual activity) varies from the actual credit posting (= allocation price x actual activity) on the affected cost center or business process. Output price variance can be due to several causes:

If you use average prices instead of period-based prices

If the capacity of the activity type is used as the basis of the price calculation.

If you set a price manually

Output price variances are determined by the following formula:

Output price variance = actual activity x (plan price - actual price)

Output Quantity Variance

The output quantity variance is the difference between the actual credits and the target credits, which is the difference between the manually-entered actual costs and the allocated actual quantities.

Variance calculation determines output quantity variance by cost element on a period basis.

Output quantity variance is based on the formula

Output quantity variance = (actual qty - manual actual qty) x plan price

Fixed output quantity variance = (actual qty – manual actual qty) x fixed plan price

Fixed Cost Variance

Fixed cost variances occur when the actual operating rate varies from the plan operating rate and some of the planned fixed costs are either underabsorbed or overabsorbed due to the credit postings.

The fixed cost variance is displayed by cost element and calculated periodically.

The fixed cost variance comprises:

The fixed cost variance is based on the following formula:

Fixed cost variance =

Plan fixed costs X (1 - operating rate) + fixed target costs - plan fixed costs

Volume Variance

Volume variance shows for each cost element the over/underabsorption of fixed plan costs for each activity type or business process. It shows whether the fixed costs are covered by the actual activity. The cause of this variance category is always an actual activity varying from the plan activity – not, for example, a manually-set fixed allocation price. The results for the covering fixed costs are also affected by a manually-set allocation price. However, the cause of the variance is not the activity, but rather the structuring of the allocation price.

Volume variance is based on the formula

Volume variance = fixed plan costs x (1 – operating rate)

Based on actual activity of 200 hours, you allocate fixed costs of $2,000 (= $10/hour X 200 hours).

Because the fixed plan costs equal only $1,000, the volume variance equals – $1000 (= $1,000 – $2,000), being the overestimated portion of fixed costs due to actual activity.

If an activity type or a business process take part in the predistribution of fixed costs , the volume variance is not calculated (see: Predistribution of Fixed Costs ).

Secondary Fixed Cost Variance

Secondary fixed cost variance is the difference between fixed plan costs and fixed target costs. It occurs only if a cost center or a business process carries out an activity-dependent activity input. Part of the fixed target costs (= fixed price x variable target quantity) is dependent on the operating rate. The result is a difference between the planned fixed costs and the target fixed costs.

Remaining Variance

Remaining variance indicates a difference between target costs and allocated actual costs that cannot be assigned to any of the following variance categories:

This can be due to the following causes:

The system does not calculate and display the remaining variance by cost element, but does so for the entire Controlling object.

The following special cases are also possible:

Idle Capacity Cost Variance

The system cannot determine idle capacity cost variance directly. However, you can also calculate it from the volume variance and the fixed portion of the output price variance if the following prerequisites are fulfilled:

In this case, the idle capacity cost variance is calculated as follows:

Idle capacity cost variance = volume variance + fixed output price variance

To display the idle capacity cost variance, you have two options:

You can then use a report to display the two variance categories together and identify them as idle capacity cost variance.

If this is the case, you must deactivate all variance categories on the output side with the exception of remaining variance. The idle capacity cost variance then appears to the remaining variance.

However, you must define the variance variant for the entire controlling area.

Output Side Variance Categories