Plan activity price calculation: Determination method


Indicator controlling which method of activity price calculation is used for an activity type.

There are three methods for calculating activity prices:

The costs incurred in one period are divided by the activities for the period. This method results in different activity prices for each period. When the variable costs fluctuate dramatically from period to period, a relatively high activity price is used to value the activity input in periods with relatively low variable costs. In contrast, activity input in periods with high variable costs is valued with a relatively low activity price.
vbl.costs fix.costs activity period. price
Per. 1 $1,000 $1,000 1,000 h $2,000/1,000 h =
$2.00 /h
Per. 2 $ 100 $1,000 100 h $1,100 /100 h =
$11.00 /h
The activity receivers in period 2 are charged more than the receivers in period 1. The periodic price is higher in period 2 than in period 1 due to the low variable costs. The fixed costs are distributed among a reduced activity quantity. Accordingly the activity price in period 2 receives a higher fixed percentage than that in period 1.
All receivers are charged with the same price irrespective of the period in which they use the activity.
The total costs of all periods are divided by the total activity for one activity type over all periods.
vbl.costs fix.costs activity average price
Per. 1 $1,000 $1,000 1,000 h
Per. 2 $100 $1,000 100 h
Total $1,100 $2,000 1,100 h $3,100 /1,100h =
$2.82 /h
When the exchange of activity is revalued with the average price for each period. a balance not equal to zero is recorded. This means that
In this method the activity price is calculating by dividing
This method smoothes out periodic fluctuations. The exchange of activity in the period is valued so that all activities in all periods are valued with the new activity price.
This pricing method is suitable for actual prices (unlike the average price method), since the price is calculated, the activity is valued with the new price, and the clearing posting is made all in the current period.
vbl.costs fix.costs activity cumulative price
Per. 1 $1,000 $1,000 1,000 h $2,000 / 1,000 h =
$2,00 /h
Per. 2 $100 $1,000 , 100 h $3,100 /1,100 h =
$2,82 /h
Per. 3 $2,000 ,$1,000 ,2,000 h $6,100 /3,000 h =
$1,97 /h
Valuation of the activity price in Period 2:
Per. 1 1,000 h * ($2.82 /h - $2.00 /h) = $820
A clearing posting of $820 is made in Period 1, since the original activity price is lower than the newly calculated price (2.00 < 2.82) and was therefore debited with too few costs.