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RP - Thread
Sales Variance Calculation Help!
RP - Thread posted October 1, 2009 by Benjamin Duquette
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Title:
Sales Variance Calculation Help!
Content:
I was doing some sales variance analysis however my company's data only provides margins and margins as a % of sales.
I decided to experiment and did a hypothetical price & volume calculation based on margins as a % of sales, and the textbook approach using sales price per unit, GP per unit and volume.
When I calculated the Sales variance, the totals were the same, but the individual price & volume variances for the two methods differed, and I am struggling to figure out why.
Has anyone ever attempted this and determined why this would be? Which version in your experience, was more accurate. Here is an example of the situation:
| Planned | Actual | Price | Volume | Sales Variance | |||
| Product A | |||||||
| Sales Price Per Unit | $ 30.0 | $ 25.0 | (323,000) | (65,000) | (388,000) | Based on Margins | |
| Production cost Per Unit | $ 17.0 | $ 17.0 | (570,000) | 182,000.0 | (388,000) | Traditional Calculations | |
| GP Per Unit | $ 13.0 | $ 8.0 | |||||
| Sales Volume | 100,000.0 | 114,000.0 | |||||
| Sales $ | $ 3,000,000.0 | $ 2,850,000.0 | |||||
| GP $ | $ 1,300,000.0 | $ 912,000.0 | |||||
| GP % | 43.3% | 32.0% | |||||
| Product B | |||||||
| Sales Price Per Unit | $ 10.0 | $ 15.0 | 114,000 | 98,000 | 212,000 | Based on Margins | |
| Production cost Per Unit | $ 3.0 | $ 3.0 | 380,000 | (168,000.0) | 212,000 | Traditional Calculations | |
| GP Per Unit | $ 7.0 | $ 12.0 | |||||
| Sales Volume | 100,000.0 | 76,000.0 | |||||
| Sales $ | $ 1,000,000.0 | $ 1,140,000.0 | |||||
| GP $ | $ 700,000.0 | $ 912,000.0 | |||||
| GP % | 70.0% | 80.0% | |||||
| Total Products | |||||||
| Sales Price Per Unit | 20.0 | 20.0 | (171,000) | (5,000) | (176,000) | Based on Margins | |
| Production cost Per Unit | 10.0 | 10.0 | (76,000) | (100,000.0) | (176,000) | Traditional Calculations | |
| GP Per Unit | $ 10.0 | $ 10.0 | |||||
| Sales Volume | 200,000.0 | 190,000.0 | |||||
| Sales $ | $ 4,000,000.0 | $ 3,990,000.0 | |||||
| GP $ | $ 2,000,000.0 | $ 1,824,000.0 | |||||
| GP % | 50.0% | 45.7% |