Planned cost accounting refers to a system of cost and performance accounting in which planned consumption quantities and prices are taken as a basis. Due to its future-oriented nature, plan cost accounting is particularly suitable for solving planning and control tasks.
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Definition / explanation
The plan cost accounting is characterized by the use of planned costs (plan costs). This differs from actual cost accounting, which is based on the costs actually incurred, as well as from Standard cost accountingthat calculates with the average or normalized costs of the past periods.
By using future planned costs, this cost accounting system is completely independent of past consumption and prices. The data relevant for budgeting is determined through estimates or calculations. In order to determine whether the planned costs have not been exceeded, target / actual comparisons are carried out in the planned cost accounting.
The planned cost calculation is usually in the form of the Full cost accounting shown in the case of the individual Payers all costs of the consumption of goods are to be added. With the so-called “marginal cost accounting”, however, there is also a modification of the planned cost accounting based on partial costs, in which only parts of the total costs are assigned to the cost objects.
What is rigid cost accounting?
There are two types of budgeting, rigid budgeting and flexible budgeting.
In the case of rigid budgeting, the simplest form of budgeting, there is no separation into fixed costs and variable costs. Here, the planned costs are calculated for a level of employment assumed to be constant, the planned employment.
These planned costs are used for the target / actual comparison, even if the actual employment deviates from the planned employment. Effective cost control is therefore only possible if the actual employment corresponds to the planned employment. Otherwise, no effective cost control is possible with the help of the rigid plan cost calculation, since it can only determine the total deviation, but no cause analysis of the cost deviation can be carried out.
What is flexible cost accounting?
With flexible budgeting, target costs are included in the calculation so that they can be adapted to the actual circumstances. The flexible plan cost accounting separates variable costs and fixed costs at the cost center level and in turn differentiates between fixed costs Utility costs and Idle costs.
With the flexible plan cost accounting, a root cause analysis of the cost variance is possible, as it enables the total variance to be divided into consumption and employment variance.
The consumption variance represents the difference between the actually incurred Actual costs and target costs. A consumption discrepancy can be caused, for example, by increased consumption of Factors of production or arise through productivity increases.
Die Beschäftigungsabweichung ist die Differenz zwischen Sollkosten und verrechneten Kosten der Ist-Beschäftigung. Diese Abweichung ist auf ungenutzte Kapazitäten, sogenannte Idle costs, zurückzuführen.
Price variance is understood to mean the difference between the actual actual cost prices and the planned cost prices. A price deviation can arise, for example, from increased purchase prices for the production material.
The total variance is the sum of the consumption variance and the employment variance. It indicates whether there is a cost overburden or a cost shortfall.