Total operating income variance means the difference between the actul operating inccome and the operating income of the master budget. Operating profit variance only determines the results of operation and excludes financing and other profits and losses. The total operating income variance is also known as sales volume variance which results in difference in the gross profit and difference in booking of other overheads costs due to difference arising in sales and closing inventory values. Questions1. What would be a first-level breakdown of the total operating income variance? 2. How can the total flexible-budget variance be broken down (i.e., what are the constituent parts of this total variance)?
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Total operating income variance means the difference between the actul operating inccome and the operating income of the
The total operating income variance is also known as sales volume variance which results in difference in the gross profit and difference in booking of other
Questions
1. What would be a first-level breakdown of the total operating income variance?
2. How can the total flexible-
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