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Former Member
Jun 18, 2011 at 07:13 AM

Automatic rate calculation for Variable Cost

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Hi Experts:

We have some cost centers where we have planned some cost elements depending of the activity type. They are variable cost.

On the other hand, we have planned activy plan and capacity.

Now, we need to calculate our activity rate by using the capacity, not the activity plan. We need it because, even though they are variable cost we have subactivity planned in order to ensure that we can meet if the level the production raise (for example, we have hired more labour that our activity plan says.

If we plan this cost as fix to calculate rates according to capacity, system will not be able to calculate theoretical cost to adapt cost plan to the level of occupation.

On the other hand, if I plan this cost as variable, system (even thouhg I indicate that this activity is calculated according to the capacity (type '2'), system calculates variable cost according to the activity plan. Only the fix cost part of the rate is calculated according to the capacity.

Would it be possible to calculate variable cost according to capacitiy? From a business point of view, it makes sense to do it.

Thanks in advance for your help.

Best regards

Jose