CHAPTER 10 /FINANCIAL PERFORMANCE REPORT ANALYSIS / MCS

REVENUE VARIANCES OR VARIANCES BASED ON SALES MARGIN Working Note A. (SQ Sold) × Std margin per unit. B. (AQ Sold) × Std margin per unit. C. (AQ Sold) × Actual margin per unit. Variances 1. Sales Margin Volume Variance = (B minus A) 2. Sales Margin Price Variance = (C minus B) 3. Total Sales Margin Value Variance = (C minus A) Note: • If the answer is negative then the variance in Unfavourable. It is denoted by (U) • If the answer is positive then the variance in Favourable. It is denoted by (F) • Std Margin = Std Sales Price minus Cost Price. • Actual Margin = Actual Sales Price minus Cost Price. Market Share Variance or Market Penetration Variance [(Actual Sales) minus (Actual Industry volume * Budgeted Market Share)]* Budgeted Margin per unit Industry Volume Variance [(Actual Industry Volume – Budgeted Industry Volume)* Budgeted Market Share]* Budgeted Margin per unit. Practical Aspect: 1. The sales budget, the actual sales and the other relevant data relating to the company are given below for the month of September: Particulars Products X’s Price Y’s Price Quantity (Rs.) Quantity (Rs.) (No.) (No.) Budgeted Estimated Industry volume (No.) 8000 4000 Budgeted Sales 600 10 400 5 Budgeted Market Share 10% 15% Actual Actual Industry Volume(No.) 6000 5000 Actual Sales 500 8 500 4 Actual Market Share 6% 10% Standard Cost per unit of the product was Rs. 5 and Rs. 2 respectively. Calculate the variances. 2. The sales budget, the actual sales and the other relevant data relating to the company are given below for the month of September: Particulars A’s Price B’s Price C’s Price Quantity (Rs.) Quantity (Rs.) Quantity (Rs.) (No.) (No.) (No.)

the actual sales and the other relevant data relating to the company are given below for the month of September: Particulars Product A Product B Product C Budgeted Estimated Industry volume (units) 833 500 1667 Budgeted volume(units) 100 100 100 Budgeted Market share 12% 20% 6% Actual Actual Industry Volume(units) 1000 1000 1000 Actual Sales(units) 100 200 150 Actual Market Penetration 10% 20% 15% Budgeted profit per unit for each product is 0. Revised Sales = Budgeted Sales for each product / Total Budgeted Sales * Total Actual Sales.) Quantity (Rs. Calculate Variance due to Market Share as well as Industry Volume. 1.80 Calculate the Sales Mix Variance.20. The budgeted sales.) (No.75. The sales budget. 0.90 150 2. 0.) (No.) 600 650 1500 Actual Sales 120 0. .00 & 1. and 1. B and C is Rs. 4.90. Hint: Sales Mix Variance = (Actual Sales – Revised Budgeted Sales) * Standard price per unit.) Quantity (Rs.20 respectively. 3. the actual sales and the other relevant data relating to the company are given below for the month of September: Particulars A’s Price B’s Price C’s Price Quantity (Rs.) 833 500 1667 Budgeted Sales 133 1 133 2 134 3 Budgeted Market Penetration 12% 20% 6% Actual Actual Industry Volume(No.60 Calculate all the Revenue Variances.CHAPTER 10 /FINANCIAL PERFORMANCE REPORT ANALYSIS / MCS Budgeted Estimated Industry volume (No.) (No.) Budgeted Budgeted Sales 100 1 100 2 100 3 Actual Actual Sales 100 0.95 200 1.80 Actual Market Penetration 20% 20% 10% The Standard cost for the Product A.95 130 1.90 150 2.