# Profit Variance Analysis

## Presentation on theme: "Profit Variance Analysis"— Presentation transcript:

Profit Variance Analysis
SHEET Profit Variance Analysis

Variance Analysis Cost Variance Analysis: - Direct Materials : - Mix Variance - Yield Variance - Direct Labor: - Variable Overhead - Fixed Overhead

Variance Analysis Sale Variance Analysis: - Static-budget variance
- Flexible-budget variance - Sales-volume variance - Sales-quantity variance - Sales-mix variance

Price and Quantity Variances: Direct Materials
Cost Variance Analysis Price and Quantity Variances: Direct Materials AQ x AP AQ x SP SQ x SP Price Variance Quantity Variance Total Variance PV = (AP – SP)AQ QV = (AQ– SQ)SP

Rate and Efficiency Variances: Direct Labor
Cost Variance Analysis Rate and Efficiency Variances: Direct Labor AH x AR AH x SR SH x SR Rate Variance Efficiency Variance Total Variance RV = (AR – SR)AH EV = (AH– SH)SR

Direct Materials : Mix and Yield Variances
Cost Variance Analysis Direct Materials : Mix and Yield Variances AQxAM x SP AQ xSMx SP SQxSM x SP Mix Variance Yield Variance Quantity Variance MV = (AM – SM)xAQxSP YV = (AQ– SQ)xSMxSP

Direct Labor : Mix and Yield Variances
Cost Variance Analysis Direct Labor : Mix and Yield Variances AHxAM x SR AH xSMx SR SHxSM x SR Mix Variance Yield Variance Efficiency Variance MV = (AM – SM)xAHxSR YV = (AH– SH)xSMxSR

Sales Variances Level 3: Sales-mix variance
Level 1: Static-budget variance—the difference between an actual result and the static-budgeted amount Level 2: Flexible-budget variance—the difference between an actual result and the flexible-budgeted amount Level 2: Sales-volume variance Level 3: Sales-quantity variance Market Share Variance Market Size Variance Level 3: Sales-mix variance

Flexible-Budget and Sales-Volume Variances Illustrated
P1,P2 TAQxAM x ACM P1,P2 TAQ xAMx BCM P1,P2 TBQxBMx BCM Flexible-budget Variance Sales-volume Variance Static-budget Variance P1:SVV = (TAQ –TBQ)x(AM-BM)xBCM P2:SVV = (TAQ –TBQ)x(AM-BM)xBCM P1:FBV = (ACM – BCM)xTAQxAM P2:FBV = (ACM – BCM)xTAQxAM

Sales-Mix Variance Measures shifts between selling more or less of higher or lower profitable products

Sales-Quantity Variance

Sales-Mix and Sales–Quantity Variances Illustrated
P1,P2 TAQ xAMx BCM P1,P2 TAQ xBMx BCM P1,P2 TBQxBMx BCM Sales-mix Variance Sales-Quantity Variance Sales-volume Variance P1:SMV = (AM-BM)xTAQxBCM P2:SMV = (AM-BM)xTAQxBCM P1:SQV = (TAQ –TBQ)xBMxBCM P2:SQV = (TAQ –TBQ)xBMxBCM

Sales–Quantity: Market Share and Market Size Variance
WBCM = กำไรส่วนเกินถัวเฉลี่ยถ่วงน้ำหนักตามงบประมาณ Market Share Variance =(AMS – BMS)xTAQxWBCM Market Size Variance = (TAQ – TBQ)xBMSxWBCM

Sales Variances Summarized
Static Budget Variance Flexible-Budget Variance Sales-Volume Variance Sales–Quantity Variance Sales-Mix Variance Market Share Variance Market Size Variance