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  • About Us
    • Nick Setchell – RealTime CEO
    • Vistage & TEC WorkshopsNick Setchell has been working with Vistage, the world’s largest CEO organization, since 2001.
    • NewsSee what’s happening with RealTime CEO.
    • Economic Update Report
    • Contact UsReach out to us. If you’re interested in booking Nick to give a keynote address or workshop at your conference, please include the date and location.
  • Concepts
    • Fiscal Focus Financial Statement AnalysisUnlock the hidden numbers in your P&L and balance sheet to see how you’re performing in 11 vital metrics.
    • Should We? / Can We?View, in real time, the actual financial impact of the hundreds of business decisions your team makes every month.
    • 24 Month Rolling ForecastingBlend your trailing twelve months with a rolling 12-month forecast to get a complete financial picture of your business.
    • J Curve ManagementTrack the number of investments you’re undertaking, the 3 phases of each, and the 5 rules for managing them.
    • Return on Operations – ROOView your return on operations percentage — your ROO % — the most powerful number to measure business success.
    • CEO Performance AnalysisBenchmark your performance as a private-company CEO against others in your industry.
  • Resource Center
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What does the Crystal Ball Variability do?

Against each of the Direct and Indirect cost levers is a Variability percentage.  The variability relates to volume changes in the business and how much Direct and Indirect costs rise and fall in conjunction with sales (volume).

If volume is impacted by the decision, consider the variability.  For example, if Volume increases by 10% and the Direct Costs Other variability is set to 90%, then Direct Costs Other are modelled to increase at 90% of 10% (or 9%). The variability impacts the increase or reduction of costs when volume changes.

Current capacity will have an integral impact on this question. If there is capacity to increase volume without additional costs, then variability should be 0.  If there is no capacity to increase volume without additional costs, then variability should be >0.

In RTC they default to 90% for Direct Costs and 25% for Indirect Costs.  These can be changed to match your business.

Note that for the Direct Costs Other and Indirect Costs Other levers, the increase will exclude depreciation because a volume increase will not increase depreciation.

 



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