Boston Creamery Case Study

On variance for Profit planning and control

systems

Participants
Neeta

Pai
Kishori Sawant
Kavita Shetty
Alpana Pawar
Vishal Agarwal
Karan Mehta

B018
B038
B027
B039
B001
B015

Boston Creamery Case

Study

Case deals with design and use of formal profit planning and control
systems. It was originally set in an ice cream company in 1973, a few years
before the advent of Designer Ice cream.

Case Study revolves around four characters:

Jim Peterson

President

Frank Roberts-

Vice President for Sales and Marketing

John Parker

Vice President for Marketing and Operations

John Vance (CPA)- Controller

Boston Creamery Case

Study

Boston Creamery is an Ice cream Company which manufactures and

distributes ice cream to wholesalers and retailers.

A new Financial Planning and control system has been installed to compare
budgeted results against actual results.

The tool is used to highlight things that needed corrective actions or

commend things that resulted in a favourable overall variance.

What is Variance
Comparison
Variance

between actual and budgeted performance.

can be Favorable or unfavorable.

It

helps to trace the origin and causes of unfavorable

variances.

Success

of variance analysis depends on how quickly

and effectively the corrective actions can be taken and
analyzed.
Calculation of variances is not an end in itself but means
to the end.

Act -1
Jim

Robertson- President
Frank Roberts- Vice President for Sales and
Marketing

Draft submitted by Marketing VP

Act -2
Jim

Peterson President
John Parker Vice President for Marketing
and Operations

Draft submitted by Operations

VP

Market Growth = STD Margin * (Budgeted Industrial Volume - Actual Industrial Volume )
* Market share.
Market Growth = 0.4539 * (11440000-12180000) * 0.5 = 167600 (F)
Market Share = STD Margin*(Budgeted Volume in liters -Actual Volume in liters)
Actual Growth in Market Share = 0.4539 * (5720000 - 5968000 ) = 112567
Proposed Growth in Market Share = 167600 Variance = 167600 - 112567 =
55300 approx
Total Manufacturing cost = Budgeted Manu. Cost - Actual Manu. Cost =
(99,000)
Manufacturing cost deducting cost incurred by wrong forecasting = 99,000

Product Mix

Act-3
Jim Peterson
Frank RobertsJohn Parker
Operations

President
Vice President for Sales and Marketing
Vice President for Marketing and

John Vance (CPA)- Controller

Variance Analysis as per John

Vance

Manufacturing Cost of Goods

Sold

Recommendations

THANK YOU