Crocker
Crocker
Crocker
To see the details of the budget of the company detailed table (Table 2) called Budgeted profit
table is prepared. It clearly shows how the company expects to earn profit. But the actual result
clearly shows that the company made a loss of $70000 instead of a profit of $210000, as was
budgeted.
To see where the company has made a mistake various variance analyses is done which are
explained below.
Revenue Variance:
There are various ways of checking the revenue variance of the company which are discussed
below:
Expenses Variance:
The summary table shows the summarized depiction of the calculations made. It also gives us
vivid picture of the relative importance of each variance as a fraction of the total revenue or
expense item to which it relates.
Name: Vikash Sharma
Enrollment No.: 09BS0002694
Variance (280.00)
*Assuming Actual Fixed Overhead as $640’000
Conclusion:
Actual and budgeted profits of Crocker Company show a considerable difference with actual
being a loss of $70000, whereas budgeted profit was of $210000. The difference mainly
occurred due to unfavorable variance in Sales of $340000. This had the main infl uence in the
loss of the company. If the company could make higher sales or if the sale price could be
increased then it will be able to negotiate the existing variance and make it favorable in the
future. It is for this reason we see unfavorability in selling price variance and volume variance.
The company has maintained a good product mix thus the variance in this case is favorable. The
favorability in variable expense variance is merely the result of unfavorable volume variance. As
variable costs are directly related to the amount of sales, thus low sale has resulted in
favorability in this case.
Name: Vikash Sharma
Enrollment No.: 09BS0002694
Appendix:
Table 1
Table 2
Table 4
Table 5
Table 7
Table 8
Table 9