Variance CategoriesThe system assigns each variance to a variance category. The variance category indicates the cause of the variance (such as price change or changed lot size). Variances are updated broken down into variance categories. Show
PrerequisitesYou have made the following settings in Customizing for Product Cost By Period or Product Cost by Order:
IntegrationThe variances calculated with target cost version 0 can be transferred to Profitability Analysis broken down into variance categories. FeaturesVariances are divided into variance categories on the input side and variance categories on the output side. Variances on the Input SideVariances on the input side are variances based on goods issues, internal activity allocations, overhead allocation, and G/L account postings. These variances are assigned to the following variance categories according to their cause:
If you want to see input quantity variances and input price variances, you must make the following settings:
Variances on the Output SideWith the following types of variances the system will show variances on the output side:
Variances on the output side are variances that result from too little or too much of the planned order quantity being delivered, or because the delivered quantity was valuated differently.
If you do not select a variance category, the variances of that category are assigned to the category remaining variances. The scrap variances are an exception to this. Scrap variances that are not shown as such can flow into any other variance category on the input side. ExampleExample for Variance Categories on the Input Side
Example for the Assignment of Costs on the Input SideSuppose you have planned a cost of USD 10 per piece for raw material 1. The actual cost for raw material 1 is USD 11. The planned consumption for raw material 1 was 10 pieces, but the actual consumption is 11 pieces. The planned cost is USD 100. The actual cost is USD 121. In both cases the order quantity is 10 pieces. The difference contains both an input price variance and an input quantity variance. The input price variance is USD 10, the input quantity variance is USD 10, and USD 1 could be considered either an input price variance or an input quantity variance. Because the system calculates the input price variances first, it assigns the USD 1 to the input price variance category, resulting in an input price variance of USD 11 and an input quantity variance of USD 10. Examples for Variance Categories on the Output Side
More InformationProduction Process If you compare the target costs on the order with the debited actual costs, the result is a variance of USD 50. This difference corresponds to the variances that are not mixed-price variances. If you compare the target costs with the allocated actual costs, the result is a variance of USD 30. This difference between the target costs and the credit of the order is the mixed-price variance. This variance arises because the standard cost of the procurement alternative for which an order was created is not the standard price.
The sum of the variances on the input side and the mixed-price variance explain the balance on the order that results from the difference between the debit and the credit.
For detailed information on the variance categories for scrap, see the Implementation Guide for the Product Cost by Period component and the Implementation Guide for the Product Cost by Order component under Period-End Closing Variances Variance Variant . For detailed information on the valuation variant for scrap, see the Implementation Guide for the Product Cost by Period component and the Implementation Guide for the Product Cost by Order component under Period-End Closing Variances Define Valuation Variant for Scrap (Target Costs) . For information on the special features of variance calculation and scrap calculation with a valuated sales order stock, refer to the following section: Variances with a Valuated Sales Order Stock For information on valuation and standard price calculation with a valuated sales order stock, refer to the following sections: Update of Valuated Sales Order Stock Standard Price with Valuated Sales Order Stocks What is the difference between the actual cost of an input and its planned cost?Compute the Total Budget Variance. 1. The total budget variance is the difference between the actual cost of the input and its planned cost.
What is the difference between cost and actual cost?While standard cost is an estimate of the expected cost, actual cost is what was actually spent to produce the product. Actual cost includes the total cost of materials, direct labor, and overhead costs that are incurred due to production.
What is the difference between the actual and standard unit price of an input multiplied by the number of inputs used?Answer and Explanation:. Is the difference between the standard cost of materials for the actual output and the actual cost of materials?Material Cost Variance (MCV)
It is the difference between the standard cost of direct materials specified for the output achieved and the actual cost of direct materials used.
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