Sales Price Variance: Formula: Sales Price Variance Product X Product Y Product Z Rate means Sales rate

(Difference b/w base year rate and current year rate) x Current Sales (in units) (Difference b/w base year rate and current year rate) x Current Sales (in units) (Difference b/w base year rate and current year rate) x Current Sales (in units) SALES PRICE VARIANCE

OR Product Base Year Sales Rate 5 4 2.6 Current Year Sales Rate 6.6 3.5 3 Variance Current Sales (in units) 10,000 4,000 20,000

X Y Z

1.6 Fav 0.5 Unfav 0.4 Fav SALES PRICE VARIANCE

Sales Volume Variance: Formula: Sales Volume Variance Product X Product Y Product Z (Difference b/w base year units and current year units) x Base year rate (Difference b/w base year units and current year units) x Base year rate (Difference b/w base year units and current year units) x Base year rate SALES VOLUME VARIANCE

OR Product Base Year Units 8,000 7,000 20,000 Current Year Units 10,000 4,000 20,000 Variance Base year Sales Rate 5 4 2.60

X Y Z

2,000 Fav 3,000 Unfav 0 SALES VOLUME VARIANCE

Cost Price Variance: Formula: Cost Price Variance Product X Product Y Product Z Rate means cost rate

(Difference b/w base year rate and current year rate) x Current Sales (in units) (Difference b/w base year rate and current year rate) x Current Sales (in units) (Difference b/w base year rate and current year rate) x Current Sales (in units) COST PRICE VARIANCE

OR Product Base Year Rate 4 3.5 2.18 Current Year Rate 4 3.5 2.80 Variance Current Sales (in units) 0 0 0.63 Unfav. COST PRICE VARIANCE 10,000 4,000 20,000

X Y Z

Cost Volume Variance: Formula: Cost Volume Variance Product X Product Y Product Z Rate means cost rate

(Difference b/w base year units and current year units) x Base year rate (Difference b/w base year units and current year units) x Base year rate (Difference b/w base year units and current year units) x Base year rate COST VOLUME VARIANCE

OR Product Base Year Units 8,000 Current Year Units 10,000 Variance Base year Cost Rate 4

X

2,000 Unfav

Y Z

7,000 20,000

4,000 20,000

3,000 Fav 0 COST VOLUME VARIANCE

3.50 2.18

If nos. of units increased (in sales) resulting increase in the cost spending

Sales Mix Variance: Formula (Difference b/w current year sales and current year sales at base year mix) x Base year G.P. Product Current year Sales 10,000 4,000 20,000 34,000 Base year Mixing % 0.2286 0.2000 0.5714 1 Current year sales at base yr. Mixing 7,771 6,800 19,429 34,000 Variance Base year Gross Profit 1.00 0.50

X Y Z

2,229 Fav 2,800 Unfav

571 Fav 0.425 Sales Mix Variance

Base year sales mixing ratio:
Product Base yr Sales 8,000 7,000 20,000 35,000 Base year Mixing ratio 0.2286 0.2000 0.5714 1

X Y Z

Final Sales Volume Variance

Formula: (Difference b/w base years and current sales (in units)) x average base year gross profit per unit W-1 Average base year gross profit per unit = Total Gross profit Total Nos. of units = $ 20,000 35,000 units =0.5714

Formula: (Difference b/w Total base years and Totalcurrent sales (in units)) x average base year gross profit per u Total nos. of units sold in base year Total nos. of units sold in current year Difference Average base year G.P 35,000 34,000 1,000 Unfav 0.57 571 Unfav

Sales (in units)

xxxx xxxx xxxx xxxx

Sales (in units)

Sales (in units) PRICE VARIANCE

Sales Price Variance 16,000 Fav 2,000 Unfav 8,000 Fav 22,000 Fav

xxxx xxxx xxxx xxxx

E VARIANCE

Sales Volume Variance 10,000 Fav 12,000 Unfav 2,000 Unfav

Sales (in units)

xxxx xxxx xxxx xxxx

Sales (in units)

Sales (in units) RICE VARIANCE

Cost Price Variance 12,500 Unfav 12,500 Unfav

xxxx xxxx xxxx xxxx

VARIANCE

Cost Volume Variance 8,000 Unfav

10,500 Fav 2,500 Fav

x) x Base year G.P. Sales Mix Variance

2,229 Fav 1,400 Unfav 243 Fav 1,071 Fav

ross profit per unit

ase year gross profit per unit

Sales Price Variance: Product Base Year Sales Rate 8 4 Current Year Sales Rate 10 6 Variance

Leather Gloves Fabric Gloves

2 Fav 2 Fav SALES PRICE VARIANCE

Product

Base Year Units 8,000 8,000

Current Year Units 12,000 20,000

Variance

Leather Gloves Fabric Gloves

4,000 Fav 12,000 Fav SALES VOLUME VARIANCE

Cost Price Variance: Product

Base Year Cost Rate 6 3

Current Year Cost Rate 9 5

Variance

Leather Gloves Fabric Gloves

3 Unfav 2 Unfav Cost PRICE VARIANCE

Cost Volume Variance: Product Base Year Units 8,000 8,000 Current Year Units 12,000 20,000 Variance

Leather Gloves Fabric Gloves

4,000 Unfav 12,000 Unfav Cost VOLUME VARIANCE

Sales Mix Variance:

Formula (Difference b/w current year sales and current year mix at base year mix) x Base year G.P. Product Current year Sales 12,000 20,000 32,000 Base year Mix % 50.00 50.00 100 Actual Qty at base yr. mix 16,000 16,000 32,000 Variance

Leather Gloves Fabric Gloves

4,000 Unfav 4,000 Fav Sales Mix Variance

Final Sales Volume Variance

Formula:

(Difference b/w Total base years and Totalcurrent sales (in units)) x average base year gross prof Total nos. of units sold in base year Total nos. of units sold in current year Difference Average base year G.P 16,000 32,000 16,000 Fav 1.5 24,000 Fav

Current Sales Price Sales (in units) Variance 12,000 20,000 24,000 Fav 40,000 Fav 64,000 Fav Sales Volume Variance 8 4 32,000 Fav 48,000 Fav 80,000 Fav

RICE VARIANCE Base year Sales Rate

OLUME VARIANCE

Current Cost Price Sales (in units) Variance 12,000 20,000 36,000 Unfav 40,000 Unfav 76,000 Unfav

E VARIANCE

Base year Sales Rate 6 3

Sales Volume Variance 24,000 Unfav 36,000 Unfav 60,000 Unfav

UME VARIANCE

year mix) x Base year G.P. Base year Gross Profit 2.00 1.00 Sales Mix Variance Sales Mix Variance

8,000 Unfav 4,000 Fav 4,000 Unfav

nits)) x average base year gross profit per unit

Ex-6 M&U + Paper

Revenue Price Variance: Rate per day: = Patient service revenue / Impatient Service days (in thousand) 2003 = 12,000 / 300 days 40 per day 2004 = 13,860 / 330 days 42 per day

Revenue price variance = Revenue price variance =

(Difference b/w base year rate and current year rate) x Current year (in (Rs. 42 - Rs. 40) x 330 days 660 Fav

Revenue Volume Variance:

Revenue volume variance = (Difference b/w base year days and current year) x Base year rate (330 days - 300 days) x Rs. 40 Revenue volume variance = 1,200 Fav

Cost Price Variance: Rate per day: = Total cost of services resident staff / Impatient Service days (in thousand) 2003 = 10,000 / 300 days 33.33 per day 2004 = 11,900 / 330 days 36.06 per day

Cost price variance =

(Difference b/w base year rate and current year rate) x Current year (in (Rs. 36.06 - Rs. 33.33) x 330 days

Cost Price variance =

900.9 Unfav

Cost Volume Variance: Cost volume variance = (Difference b/w base year days and current year) x Base year rate (330 days - 300 days) x Rs. 33.33 Cost volume variance = 1,000 Unfav.

Revenue Mix Variance: Formula (Difference b/w current year sales and current year mix at base year mix) x Base year G.P. Not possible

Final Sales Volume Variance

Average base year gross profit per unit =

Total Gross profit Total Nos. of units

2,000,000 300,000

Formula:

(Difference b/w Total base years and Totalcurrent sales (in units)) x average base year gross profit per Total nos. of units sold in base year Total nos. of units sold in current year Difference Average base year G.P 300 330 -30 Fav 6.67 (200) Fav

year rate) x Current year (in days)

year rate) x Current year (in days)

x) x Base year G.P.

6.67

base year gross profit per unit

Exercise no.7 Sales Price Variance: Revenue price variance = Revenue price variance = Sales Volume Variance: Revenue volume variance = (Difference b/w base year days and current year) x Base year rate (25,000 - 24,000) x 3 Revenue volume variance = 3,000 Unfav Cost Price Variance: Cost price variance = Cost Price variance =

(Difference b/w base year rate and current year rate) x Current year (in (Rs. 3 - Rs. 2.75) x 24,000 units 6000 Unfav

(Difference b/w base year rate and current year rate) x Current year (in (Rs. 2.38 -Rs. 2.40) x 24,000 units 480 Unfav

Cost Volume Variance: Cost volume variance = (Difference b/w base year days and current year) x Base year rate (25,000 units - 24,000 units) x 2.38 Cost volume variance = 2,380 fav

Revenue Mix Variance: Formula (Difference b/w current year sales and current year mix at base year mix) x Base year G.P. Not possible due to mix possible in single product

Final Sales Volume Variance

Average base year gross profit per unit =

Total Gross profit Total Nos. of units

15,500 25,000

Formula:

(Difference b/w Total base years and Totalcurrent sales (in units)) x average base year gross profit per Total nos. of units sold in base year Total nos. of units sold in current year Difference 25000 24000 1000 Unfav

Average base year G.P

0.62 620 Unfav

year rate) x Current year (in days)

year rate) x Current year (in days)

x) x Base year G.P.

0.62

base year gross profit per unit

1 Sales Price Variance

If Favourable then If Unfav. Then

"Gain due to increase in Sales price" "Loss due to decrease in sales price"

2 Cost Price variance

If Favourable then If Unfav. Then

"Gain due to decrease in cost price" "Loss due to increase in Cost price"

3 Sales Mix Variance

If Favourable then If Unfav. Then

"Gain due to shift in Sales mix" "Loss due to shift in Sales mix"

4 Final Sales volume variance

If Favourable then If Unfav. Then

" Gain due to increase in units sold" " Loss due to decrease in units sold"

Sales Price Variance: Formula: Sales Price Variance Product X Product Y Product Z Rate means Sales rate

(Difference b/w Std. rate and Actual rate) x Actual units (Difference b/w Std. rate and Actual rate) x Actual units (Difference b/w Std. rate and Actual rate) x Actual units SALES PRICE VARIANCE

OR Product Standard Rate 15 12 10 Actual Rate 16 12 9 Variance Actual units 1 Fav 0 5,112 4,208

A B C

1 Unfav 1,105 SALES PRICE VARIANCE

Sales Volume Variance: Formula: Sales Volume Variance Product X Product Y Product Z Rate means Sales rate

(Difference b/w Std. units and actual units) x Standard rate (Difference b/w Std. units and actual units) x Standard rate (Difference b/w Std. units and actual units) x Standard rate SALES VOLUME VARIANCE

OR Product Std. Units 6,000 3,500 1,000 Actual Units 5,112 4,208 1,105 Variance Standard Rate 15 12 10.00

A B C

888 Unfav 708 Fav 105 Fav SALES VOLUME VARIANCE

Cost Price Variance: Formula: Cost Price Variance Product X Product Y Product Z Rate means cost rate

(Difference b/w Standard rate and Actual rate) x Actual units (Difference b/w Standard rate and Actual rate) x Actual units (Difference b/w Standard rate and Actual rate) x Actual units COST PRICE VARIANCE

OR Product Standard Rate 12 10 8.75 Actual Rate 13.98 9.72 8.83 Variance Actual Units 5,112 4,208 1,105

A B C

1.98 Unfav 0.28 Fav 0.08 Unfav. COST PRICE VARIANCE

Cost Volume Variance: Formula: Cost Volume Variance Product X Product Y Product Z Rate means cost rate

(Difference b/w Standard units and Actual units) x Standard rate (Difference b/w Standard units and Actual units) x Standard rate (Difference b/w Standard units and Actual units) x Standard rate COST VOLUME VARIANCE

OR Product Standard Units 6,000 3,500 Actual Units 5,112 4,208 Variance Standard Rate 12 10.00

A B

888 Fav 708 Unfav

C

1,000

1,105

105 Unfav COST VOLUME VARIANCE

8.75

If nos. of units increased (in sales) resulting increase in the cost spending

Sales Mix Variance: Formula (Difference b/w Actual units and Actual units at std. mix ) x Standard G.P. Product Actual Unis 5,112 4,208 1,105 10,425 Std. Mix % 57.14 33.33 9.52 100 Actual Qty at standard mix 5,957 3,475 993 10,425 Variance Standard Gross Profit 3.00 2.00 1.250

A B C

845 Unfav 733 Fav 112 Fav Sales Mix Variance

Final Sales Volume Variance Formula: (Difference b/w standard units and Actual units) x average Standard gross profit per unit Average standard gross profit per unit = Total Gross profit Total Nos. of units 26250 10500

Product

Actual units

Standard Units 6,000 3,500 1,000 10,500

Variance

Average Standard Gross profit per unit 888 Unfav 708 Fav 2.50 2.50

A B C

5,112 4,208 1,105 10,425

105 Fav 2.50 Final Sales volume variance

OR Final Sales Volume Variance:

Formula:

(Difference b/w Total Standard units and Total Actual units) x average Standard Gross profit per unit Total nos. of Standard units sold Total nos. of Actual units sold Difference Average base year G.P 10500 10425 75 Unfav 2.50 188 Unfav

xxxx xxxx xxxx xxxx

PRICE VARIANCE

Sales Price Variance 5,112 Fav 1,105 Unfav 4,007 Fav

xxxx xxxx xxxx xxxx

VARIANCE

Sales Volume Variance 13,320 Unfav 8,496 Fav 1,050 Fav (3,774) Unfav

xxxx xxxx xxxx xxxx

RICE VARIANCE

Cost Price Variance 10,122 Unfav 1,178 Fav 88 Unfav. 9,032 Unfav

xxxx xxxx xxxx xxxx

Sales Volume Variance 10,656 Fav 7,080 Unfav

919 Unfav 2,657 Fav

Sales Mix Variance

2,535 Unfav 1,466 Fav 140 Fav 929 Unfav

2.50

Final Sales Volume Variance 2,220 Unfav 1,770 Fav 263 Fav 188 Unfav

rd Gross profit per unit

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