Original BudgetBudgeted Mkt Size 11440000Budgeted Mkt Share 5720000Budgeted Mkt Share (%) 0.5

Sales 9219900VC 6628600 0.718945TFC 1945900Profit 645400

1Budgeted fr Increased Demand mkt size expected ActualActual Mkt size 12180000 mkt share expected expectedIncrease in mkt Size 0.065 sales mix expected expected

costs expected expectedSales 9819193.5VC 7059459TFC 1945900Profit 813834.5 Diff due to Increased Demand 168434.5

Budget for Actual Mkt ShareAct Mkt Size 12180000Act Mkt Share 5968366Act Mtk Share (%) 0.49

Sales 9622809.63VC 6918269.82TFC 1945900Profit 758639.81 Diff dut ot Mkt Share -55194.69

Revised Budget for Actual (Given)

Sales 9645300VC 6936300TFC 1945900Profit 763100 Diff due to Sales Mix 4460.19

2 3Actual Actual ActualActual Actual Actualexpected Actual Actualexpected expected Actual

Mkt Size Var F

Mkt Share VarU

Sales mix Var F

BUDGETED PLAN 1973

vanilla 0.4329 2,409,854 1,043,226 0.42 Chocolate 0.4535 2,009,061 911,109 0.35 Walnut 0.5713 48,883 27,927 0.01 Buttercrunch 0.4771 262,185 125,088 0.05 Cherry Swirl 0.5153 204,774 105,520 0.04 Strawberry 0.4683 628,560 294,355 0.11 Pecan Ship 0.5359 157,012 84,143 0.03 TOTAl 0.4530 5,720,329 2,591,368 1.00

Budgeted Total expenses - Breakdown

Variable Cost Fixed Cost TotalManufacturing 5,888,100 612,800 6,500,900 1.03 Delivery 187,300 516,300 703,600 0.03 Advertising 553,200 553,200 0.10 Selling 368,800 368,800 Administrative 448,000 448,000 TOTAL 6,628,600 1,945,900 8,574,500

Sales 9,219,900 1.6118 Standard CostVariable Cost 6,628,600

Contribution Margin 2,591,300 Fixed Cost 1,945,900

Income From Operations 645,400

Standard Contr. Margin/Gallon

Forecasted gallon Sales

Forecasted Standard Cont. Margin

Var Manuf Cost/ gallonVar Del cost / gallonVar Adver Cost/ Gallon

REVISED BUDGETED FOR ACTUAL VOLUME 1973

vanilla 0.4329 2,458,212 1,064,160 Chocolate 0.4535 2,018,525 915,401 Walnut 0.5713 50,124 28,636 Buttercrunch 0.4771 268,839 128,263 Cherry Swirl 0.5153 261,240 134,617 Strawberry 0.4683 747,049 349,843 Pecan Ship 0.5359 164,377 88,090 TOTAl 0.4539 5,968,366 2,709,010

Budgeted Total expenses - Breakdown

Variable Cost Fixed Cost TotalManufacturing 6,113,100 612,800 6,725,900 Delivery 244,500 516,300 760,800 Advertising 578,700 578,700 Selling 368,800 368,800 Administrative 448,000 448,000 TOTAL 6,936,300 1,945,900 8,882,200

Sales 9,645,300 1.6161 Price Charged Per Gallon is Higher than Budgeted standard cost Variable Cost 6,936,300

Contribution Margin 2,709,000 Fixed Cost 1,945,900

Income From Operations 763,100

Standard Contr. Margin/Gallon

Forecasted gallon Sales

Forecasted Standard Cont. Margin

Price Charged Per Gallon is Higher than Budgeted standard cost

vanilla 0.4329 2,458,212 1,064,160 Chocolate 0.4535 2,018,525 915,401 Walnut 0.5713 50,124 28,636 Buttercrunch 0.4771 268,839 128,263 Cherry Swirl 0.5153 261,240 134,617 Strawberry 0.4683 747,049 349,843 Pecan Ship 0.5359 164,377 88,090 TOTAl 0.4539 5,968,366 2,709,010

Budgeted Total expenses - Breakdown

Variable Cost Fixed Cost TotalManufacturing 6,143,412 612,800 6,756,212 1.03 Delivery 195,421 516,300 711,721 0.03 Advertising 577,187 577,187 0.10 Selling 368,800 368,800 Administrative 448,000 448,000 TOTAL 6,916,020 1,945,900 8,861,920

Sales 9,619,681 1.6118 Standard cost from Budgeted Volume and salesVariable Cost 6,916,020

Contribution Margin 2,703,660 Fixed Cost 1,945,900

Income From Operations 757,760

Here the standard Costs derived from the budgeted sales and budgeted volume are used on the Actual volume to arrive at the variable cost and the sales amount.

Standard Contr. Margin/Gallon

Forecasted gallon Sales

Forecasted Standard Cont. Margin

Var Manuf Cost/ gallonVar Del cost / gallonVar Adver Cost/ Gallon

Standard cost from Budgeted Volume and sales

Here the standard Costs derived from the budgeted sales and budgeted volume are used on the Actual volume to arrive at the variable cost and the sales amount.

Actual Budgeted for Actual Variance

Sales Net 9,657,300 9,645,300 12,000

Manufacturing Cost 6,824,900 6,725,900 99,000 Delivery 706,800 760,800 -54,000 Advertising 607,700 578,700 29,000 Selling 362,800 368,800 -6,000 Administrative 438,000 448,000 -10,000 Total Expenses 8,940,200 8,882,200 58,000

Income from Operations 717,100 763,100 -46,000

EARNING STATEMENT REVISITED.

Actual Budgeted for Actual Variance

Sales Net 9,619,681 9,645,300 -25,619 Actual Volume at the standard price considered for the actual sales.

Manufacturing Cost 6,824,900 6,725,900 -99,000 Delivery 706,800 760,800 54,000 Advertising 607,700 578,700 -29,000 Selling 362,800 368,800 6,000 Administrative 438,000 448,000 10,000 Total Expenses 8,940,200 8,882,200 -58,000

Income from Operations 679,481 763,100 -83,619

Actual Volume at the standard price considered for the actual sales.

Sales Mix and Volume variance

Product Budgeted Volume Actual Volume Difference

1 2 3 = 2-1vanilla 2,409,854 2,458,212 48,358 Chocolate 2,009,061 2,018,525 9,464 Walnut 48,883 50,124 1,241 Buttercrunch 262,185 268,839 6,654 Cherry Swirl 204,774 261,240 56,466 Strawberry 628,560 747,049 118,489 Pecan Ship 157,012 164,377 7,365 TOTAL 5,720,329 5,968,366 248,037

Mix Variance

Product Budgeted Proportion Actual Sales

1 2vanilla 0.42 2,514,347 2,458,212 Chocolate 0.35 2,096,175 2,018,525 Walnut 0.01 51,003 50,124 Buttercrunch 0.05 273,554 268,839 Cherry Swirl 0.04 213,653 261,240 Strawberry 0.11 655,815 747,049 Pecan Ship 0.03 163,820 164,377 TOTAL 1.00 5,968,366 5,968,366

Sales Volume Variance

Product Budgeted Proportion Budgeted Volume

1 2vanilla 0.42 2,514,347 2,409,854 Chocolate 0.35 2,096,175 2,009,061 Walnut 0.01 51,003 48,883 Buttercrunch 0.05 273,554 262,185 Cherry Swirl 0.04 213,653 204,774 Strawberry 0.11 655,815 628,560 Pecan Ship 0.03 163,820 157,012 TOTAL 1.00 5,968,366 5,720,329

VARIANCE FROM OPERATIONS

Budgeted Mix at actual Volume

Budgeted Mix at actual Volume

Actual

Manufacturing 6,756,212 6,824,900 -68,688 Delivery 711,721 706,800 4,921 Advertising 577,187 607,700 -30,513 Selling 368,800 362,800 6,000 Administrative 448,000 438,000 10,000 TOTAL 8,861,920 8,940,200 -78,280

Total Variance

Variance Due to SalesVolume 112,363 Mix 5,279 Prices 12,000 129,642

Variance Due to OperationsManufacturing -68,688 Delivery 4,921 Advertising -30,513 Selling 6,000 Administration 10,000 -78,280

Net variance 51,362

So here we see that though the total variance is positive it is just because of the increased sales volume and the increased prices per gallon than the budgeted prices.

Second case is that if there was only the volume increase and no increase in the price then the variance statement could have been less favourable.

TOTAL VARIANCE

Variance Due to SalesVolume 112,363 Mix 5,279 Prices -25,619 92,023

Variance Due to OperationsManufacturing -68,688 Delivery 4,921 Advertising -30,513 Selling 6,000 Administration 10,000 -78,280

Net variance 13,743

Budgeted Expense at Actual Volume

Budgeted Sales Volume and Market Share

Estimated Industry volume 11,440,000 Budgeted Volume (Units) 5,720,329

Budgeted Volume (%) 50.00%

Actual Sales Volume and Market Share

Actual Industry Volume 12,180,000 Actual Sales Volume (unit) 5,968,366

Actual Share in (%) 49.00%

Variance Due to Market Share

Product Budgeted Proportion Actual Sales

1 2vanilla 0.42 2,514,347 2,565,736 Chocolate 0.35 2,096,175 2,139,018 Walnut 0.01 51,003 52,045 Buttercrunch 0.05 273,554 279,145 Cherry Swirl 0.04 213,653 218,020 Strawberry 0.11 655,815 669,219 Pecan Ship 0.03 163,820 167,168 TOTAL 1.00 5,968,366 6,090,350

Actual Sales (Unit) 5,968,366 aBudget share at Actual industry Volume 6,090,350 bDifference -121,984 c=a-bBudgeted Unit Contribution 0.4530 dVariance due to market share -55,260 e = c x d

Variance due to Industry Volume

Actual Industry Volume 12,180,000 aBudgeted Industry Volume 11,440,000 bDifference 740,000 c=a-bBudgeted Market Share 50.00% dMarket share (gain/Loss) 370,021 e = c x d

Budgeted Share of sales at actual

industry Volume

Budgeted unit contribution 0.4530 fVariance Due to industry Volume 167,623 g = e x f

Total of Market and Industry Volume Variance 112,363

Unit Contribution

0.4329 20,934 0.4535 4,292 0.5713 709 0.4771 3,175 0.5153 29,097 0.4683 55,488 0.5359 3,947

117,642

Difference Unit Contribution

3 = 2-1 4 5 = 4 x 3 -56,134.76 0.4329 -24,301 -77,650.13 0.4535 -35,214 -878.60 0.5713 -502 -4,714.50 0.4771 -2,249 47,586.87 0.5153 24,522 91,234.25 0.4683 42,725 556.86 0.5359 298

5,279

Difference Unit Contribution

3 = 1-2 4 5 = 4 x 3 104,492.76 0.4329 45,235 87,114.13 0.4535 39,506 2,119.60 0.5713 1,211 11,368.50 0.4771 5,424 8,879.13 0.5153 4,575 27,254.75 0.4683 12,763 6,808.14 0.5359 3,648

112,363

Sales Volume variance

Sales Volume variance

Sales Volume variance

More expenses are incurred than standard budgeted expense

So here we see that though the total variance is positive it is just because of the increased sales volume and the increased prices per gallon than the budgeted prices.

Second case is that if there was only the volume increase and no increase in the price then the variance statement could have been less favourable.

Price variance considering Actual Volume at the standard price taken for the actual sales amount.

Difference Unit Contribution

3 = 1-2 4 5 = 4 x 3 -51,389.41 0.4329 -22,246 -42,842.62 0.4535 -19,429 -1,042.42 0.5713 -596 -5,591.02 0.4771 -2,667 -4,366.74 0.5153 -2,250 -13,403.85 0.4683 -6,277 -3,348.23 0.5359 -1,794

-55,260

Sales Volume variance

Performance for Frank Roberts

Actual Value Difference (A)

a b c = a-b dSales 9,645,300 9,657,300 12,000 9,619,681 Advertising 578,700 607,700 -29,000 577,187 Selling 368,800 362,800 6,000 368,800 TOTAL 10,592,800 10,627,800 -11,000 10,565,668

Performance for John Parker

Actual Value Difference (C)

a b c = a-b dManufacturing 6,725,900 6,824,900 -99,000 6,756,212 Delivery 760,800 706,800 54,000 711,721 Administrative 448,000 438,000 10,000 448,000 TOTAL 7,934,700 7,969,700 -35,000 7,915,933

Dairy Ingredients varianceMilk Price Variance

Sugar Price VarianceFlavors variance

TOTAL

Revised Budgeted Value

Actual Value at Budgeted Standard

Cost

Revised Budgeted Value

Actual Value at Budgeted Standard

Cost

Performance for Frank Roberts

Difference (B)

e = d-b 37,619 -30,513 -6,000 1,107

Performance for John Parker

Difference (D)

e = d-b -68,688 4,921 10,000 -53,767

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