Adapting Variance Analysis to a Marketing Department Sue Young sells fax machine

Question

Adapting Variance Analysis to a Marketing Department

Sue Young sells fax machines for Express Fax. There are two fax machines: model 700 and model 800. At the beginning of the month, Sue's sales budget is as follows:

Model 700 Model 800

Budgeted contribution margin per unit $ 200 $ 300

Forecasted sales in units 100 100

Budgeted margins $ 20,000 $ 30,000

At the end of the month, the number of units sold and the actual contribution margins are as follows:

Model 700 Model 800

Actual contribution margin $ 150 $ 350

Number of units sold 150 80

Actual contribution $ 22,500 $ 28,000

Contribution margins have changed during the month because the fax machines are imported and foreign exchange rates have changed.

Required:

Design a performance evaluation report that analyzes Sue Young's performance for the month.

Explanation / Answer

Sue Young Bugeted Quanity*Budgeted Margin Revised Actual Qaunity*Budgted Margin Actual Qauntity*Budgeted Margin Actual Quantity*Actual Margin Model 700 200 100 20000 200 115 23000 200 150 30000 150 150 22500 Model 800 300 100 30000 300 115 34500 300 80 24000 350 80 28000 200 50000 230 57500 230 54000 230 50500 Quanity Variance Mix Variance Price Variance =50000-57500 =57500-54000 =54000-50500 7500 Favourable 3500 Unfavourable 3500 Unfavourable Volume Variance Uncontrollable Variance 4000 Favourable Controllable variance which should be included in report We appreciate the rating of our answers Thank You

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