RevGenR Seats Incorporated – variance anylysis Essay Sample

a. Actual units of all merchandises sold= 5. 940+16. 060 = 22. 000 units Budgeted units of all merchandises sold = 4. 788 + 18. 012 = 22. 800 units ( I )

Golf Cart = 22. 000 ten [ ( 5. 940/22. 000 ) – ( 4. 788/22. 800 ) ] x 134 = $ 176. 880 ( F ) Mobility vehicle = 22. 000 ten [ ( 16. 060/22. 000 ) – ( 18. 012/22. 800 ) ] x 164 = $ 216. 480 ( U ) Total sale mix variance= $ 39. 600 ( U )

Golf Cart = ( 22. 000 – 22. 800 ) ten ( 4. 788/22. 800 ) x 134 = $ 22. 512 ( U ) Mobility vehicle = ( 22. 000 – 22. 800 ) ten ( 18. 012/22. 800 ) x 164 = $ 103. 648 ( U ) Total sale measure variance= $ 126. 160 ( U )

B. Based on above analysis. there are unfavourable entire sale mix discrepancy of $ 39. 600 and unfavourable entire sale measure discrepancy of $ 126. 160. It means the selling and gross revenues forces didn’t execute decently and caused the both unfavourable discrepancy happened. There are two grounds. First. the sale mix discrepancy quantifies the effects on part border of selling the two merchandises in a mix that differs from the original budget. As shown in the analysis above. RevGenr had a budgeted mix of 21 % Golf Cart ( 4. 788/22. 800 ) and 79 % Mobility vehicle ( 18. 012/22. 800 ) .

However. the existent mix turned out to be 27 % Golf cart ( 5. 940/22. 000 ) and 73 % Mobility vehicle ( 16. 060/22. 000 ) . Selling a lower proportion of Mobility vehicle from 79 % to 73 % generates an unfavorable entire gross revenues mix discrepancy because Mobility vehicle has a higher part border of $ 164 per unit compared to $ 134 per unit for Golf cart. Second. the gross revenues measure discrepancy isolates the consequence on part border of unit gross revenues differing from the budget. keeping changeless the gross revenues mix at the budgeted proportions. Because entire gross revenues measure was 22. 000 units compared to the budget of 22. 800 units. it caused the entire measure discrepancy is unfavorable.

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Actual market portion = ( 5. 940+16. 060 ) /160. 000=0. 1375
Budgeted market portion = ( 4. 788 + 18. 012 ) /123. 000 = 0. 1854
Budgeted CM per composite unit = [ ( 4. 788 ten 134 ) + ( 18. 012 ten 164 ) ] / ( 4. 788 + 18. 012 ) = $ 157. 7 Market portion discrepancy = 160. 000 ten ( 0. 1375 – 0. 1854 ) x 157. 7 =1. 208. 613 ( U )

Market size discrepancy = ( 160. 000 – 123. 000 ) ten 0. 1854 ten 157. 7 = $ 1. 081. 790 ( F )