During the last quarter a company had a bad sales and it's budgeted results are as given below: Product A: sales =2,50,000, PV ratio=50% Product B: sales =4,00,000, PV ratio=40% Product C: sales =6,00,000, PV ratio=30% Overheads-fixed is 5,02,200 Director of the company wants to identify the cause and have a detailed statement of amount of loss and recommendation of sales in each of the products as well as in total sales while maintaining same level of sales mix which will ultimately results in eliminating the loss.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
During the last quarter a company had a bad sales and it's budgeted results are as given below:
Product A: sales =2,50,000, PV ratio=50%
Product B: sales =4,00,000, PV ratio=40%
Product C: sales =6,00,000, PV ratio=30%
Director of the company wants to identify the cause and have a detailed statement of amount of loss and recommendation of sales in each of the products as well as in total sales while maintaining same level of sales mix which will ultimately results in eliminating the loss.
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