budget variance analysis mmzg627 lecture 16
TRANSCRIPT
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8/18/2019 Budget Variance Analysis MMZG627 Lecture 16
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Product Units Unit Sales Price Unit Variable Cost Sales Amount($) Actual Sales Unit
Actual Budget Budget Budget Actual Price Contribution
Alto 100 100 $1.00 $0.80 $90 0.9 0.20
Swift 200 100 $2.00 $1.10 $410 2.05 0.90
Van 150 100 $3.00 $1.80 $375 2.5 1.20
Total 450 300 $875
Key Point
Color code: Budget Actual Difference
Budget Sale !00 $875
Actual "aria#le %&en 370 570
Contri#ution 230 !"# #
%ote& 'e are trying to elain t*is difference using
t*e t*ree +ariances
See net tab, wor-s*eet for solution details
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8/18/2019 Budget Variance Analysis MMZG627 Lecture 16
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T*is is t*e met*od outlined in t*e boo- by .o+indara/an and Ant*ony0 1or eam urose lease follow t*is met*od0
Ste 2) Selling rice +ariance
Alto Swift Van 'otal
Actual (ol )unit* 2"" 3"" 2#" 450
Actual &rice &er unit 0.9 2.05 2.5
Budget &rice &er unit 1.00 2.00 3.00
Actual o(er+ )under* #udget &er unit 4"02" "0"# 4"0#"
,a(ora#le+ )unfa(ora#le* &rice (ariance 42" 2" 4# 4# 5t is unfa+orable6 because of negati+e sign
Ste 3) 7i +ariance difference mi +ariance
Alto 33.33- 150 100 50 "03" 10 22.22
S/ift 33.33- 150 200 50 "08" 45 99099
"an 33.33- 150 150 0 203" 0 33.33
'otal 1 450 450 !#
Ste !) Volume +ariance budgeted +ol difference
Alto 150 100 50 0.2 10
S/ift 150 100 50 0.9 45
"an 150 100 50 1.2 !0
'otal 450 300 150 22#
Ste 9) ;+erall
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Key 1ormulas&
2) Selling Price Variance
)actual &rice #udget &rice* % actual (olue
Combined mi and +olume
)actual (ol #udget (ol* % #udget unit contri#ution
(t*is is for your reference6 5 *a+e not calculated t*is *ere0)
3) 7i +ariance
)total actual (ol of ale % #udget &ro&ortion* )actual (olue of ale* % #udget unit contri#ution
!) Volume +ariance
6)total actual (olue of ale* % )Budgeted &ercentage* )Budgeted ale* % )Budgeted unit contri#ution*
9) ;+erall +ariance
elling &rice (ariance i% (ariance (olue (ariance
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Alternate aroac* to sol+ing t*e roblem& 1or eam urose lease follow tetboo- aroac*
(Tetboo- aroac* in re+ious tab, wor-s*eet)
Budgeted Actual Actual Cro cec
Sale at #udgeted unit &rice Sale Sale Sale at &rice
at Budget at Budget Actual rice 0.9
Sale Dollar rice rice rice "ariance 2.05
Alto 100 100 90 10 2.5S/ift 200 400 410 10
"an 300 450 375 75
'otal Sale $!00 $950 $875 )$75*
Cot of ale at #udgeted cot
Alto 80 80 80
S/ift 110 220 220
"an 180 270 270
Cot of ale $370 $570 $570
Budgeted Contri#ution argin $230 $380 $305
A(erage unit contri#ution argin $0.77 $0.84
Difference #et/een #udgeted contri#ution argin and actual 75
rice (ariance 75
"olue (ariance 0.7!!!!7 % 150 115
i% (ariance 0.844444 0.7!!!!7 % 450 35
'otal (ariance 75