What is idle-capacity cost variance in SAP CO - Controlling?

SAP Term: idle-capacity cost variance

• Component: CO

• Component Name: Controlling

• Description: Sum of the volume variance and the fixed portion of the output price variance. The following requirements must be met: For the activity, periodic activity prices were calculated on the basis of the capacity. No revaluation at actual activity prices takes place. Idle capacity cost variances are not calculated directly.

Smart SAP Assistant

• Key Concepts: 
  Idle-capacity cost variance is a term used in SAP Controlling (CO) to refer to the difference between the actual costs of idle capacity and the expected costs of idle capacity. It is calculated by subtracting the expected costs from the actual costs. This variance can be used to identify areas of inefficiency in production processes and to help make decisions about how to improve them.
  
  How to use it: 
  In order to calculate the idle-capacity cost variance, you must first determine the expected costs of idle capacity. This can be done by estimating the amount of time that a machine or process will be idle and then multiplying that time by the cost per hour for that machine or process. Once you have determined the expected costs, you can then subtract them from the actual costs to calculate the variance.
  
  Tips & Tricks: 
  When calculating the idle-capacity cost variance, it is important to take into account any additional costs associated with idle capacity, such as maintenance or energy costs. Additionally, it is important to consider any potential savings that could be realized by reducing idle capacity, such as increased efficiency or reduced waste.
  
  Related Information: 
  The idle-capacity cost variance is closely related to other terms used in SAP Controlling, such as overhead absorption rate and activity-based costing. Additionally, it is important to consider other factors that may affect production processes, such as labor costs and materials costs.