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what we're gonna be going over here is sales
variants analysis and we're going to look at how we calculate these different
variances
based on our sales here so when you're talking about variances you're dealing
with these
different budgets they're gonna in will be looking at and table form here so
on our table we're gonna have to deal with these different but it's here we're
gonna
be having our static budget are flexible budget
in our actual results in or going to be looking at our variances between those
amounts
but I further going on here at our table its understand what
we're gonna be looking out for each other's budget so for sales variances
we're going to be looking at our having to German our revenues here
and then knowing our revenues here then we're going to have to determine our
total variable cost was who had wrecked material directly a burger and some
variable overhead
in on a per unit basis we're going to be looking at that so after we know our
total variable cost then we can determine the next thing would be our
contribution margin
in contribution margin is simply the difference between our revenues here
inner total variable costs in them months knowing our contribution margin
then we can determine our operating income and that's really good at
difference here between our fixed overhead that we'd have
and then the difference between a fixed overhead their contribution margin
would be our operating income so under each of these
up items here we're going to have to determine our different very a sales
variance is here
okay so starting out with our budgets here so
first with our static budget that's really are budgeted units are
I that we have for the period time some budgeted costs are some budget price
everything is budgeted here that are static budget that's really
our master budget and that's something we do at the beginning of the period we
established that
are static budget here again budgeted units
times a budgeted Pricer budgeted cost everything is budgeted here for static
now at the ended a period this is where we can determine our
actual results those are really are actual units are prices
are actual number units or quantities here times the
actual cost is a natural price so those would be our actual results
at the end of the period we determine those in them this is where we have our
flexible budget will be looking at the flexible but if you're so
remember at the we do we determine our flexible budget at the
into the period here because it's based on our actual units or quantity so we
have for the period
times the budgeted cost to the budget
budgeted cost years coming of our static budget that we develop that beginning a
period here
in our actual units are actual quantities are coming off the
actually the actual results that we have for the period so that would be our
flexible budget so
hear the case when you're doing a sales variance analysis here you can have to
determine
up the difference between your actual inflexible budgeted amount here
those would be your price or cost variances and then the difference
between a flexible and the static amounts
those would be the volume variance is because if you look at it in these terms
yourself
flexible amount here we are actually were so say we had 10,000 for the period
here
in our static amount we budgeted 12,000 so really the only difference between a
flexible and a static or
budget here is the volume or the number units because a flexible
budget is set it up on the budgeted values are budgeted amounts for the
period here
but the units are based on our
actual Mansell that is the difference and then the difference between our
actual on
but a flexible budget so I would be the price or cost because the unit numbers
are the same just say for actual units say for the period we sold
10,000 here's flexible budget is 10,000 so this is where you're going to get
your price for cost variances
okay so we have to also look at the total variance between our static
in a row actual months yeah at the end appear and that's where we're going to
get down to our total sales volume variance
okay so stepping through our different variances here so four units sold
II will look at a key at the end here as a reference
but you can understand a used and track sure you not be used budgeted units 0
for revenues
is just taking our for actual quantities actual yunus times the
actual price on a per unit basis yet flexible budgets actual units times the
budget price and a Corsair static budget is just the budget units times abided
price on a per unit basis so are sales price variance
is really be the difference here between our actual price
our sales price variance is the difference between Iraq's what actual
flexible budget amount
that would be a difference between actual price and
our budget price the actual units are the same here
between Excel actual difference between actual price budget a price times actual
units
gives you your sales price variance here and then the sales volume
variance that's just the difference between in this case
up we take the budget prices the same here for both
flexible on static but the actual units
difference between the actual units for a flexible here
in a buddy budget units for the static mom so
that is the sales volume variance is a nap the way this
you calculate all these variances through these different
well items here that you have so the next thing would be
your direct material directly burn variable overhead same
deal here what you're gonna come up with you is your total variable cost but
on a per unit basis just to look at our I static I'm out here just say
you have some budgeted number units here quantities here
times each one a reinforcer dryer material labor and overhead
so direct material be budgeted direct material
budget a direct labor for labor for variable hofer had budgeted variable
overhead
and then for flexible budget all you're doing is taking your actual number units
times
each one of those budgeted inputs here in an actual quantities are just be
their actual results actual units times the actual
on a per unit basis for direct material labor in over its all
that's pretty much under table work here so our total variable cost that we be
looking at would just be the death other
guard three item three here direct materials
for hear directly per in variable overhead five here
so that's how you could deter me a troll variable cost
but on a per unit basis just say you were given the case here sorry turtle
variable cost and let's just say we knew it on a per unit basis which we could
calculate so looking at our static budget
you have a budget variable cost you're on a per unit basis
time since budgeted units and then for the flexible budget would just be
actual Eunice times a budget variable cost in for actual budget
actually understands the actual variable cost on a per unit basis
so again looking at our unit cost variance that's the difference between
our actual in our flexible budget
so we just take 'em with the actual unit here are the same between
both those budget but the different it would be the difference here actual
variable cost from actual Mar
I'd and between actual variable costs are budgeted variable cost so that
difference times the
actual units gives your unit cost variance here
invested deals with your variable cost that you're dealing with
what we looked up above here remember that dealt with our revenues portion
here
up the sales price and volume appearance here
help now we getting down to our variable cost portion here
in thats we're looking at it in those terms here this is the unit cost
variance here for the sale so
we have a sales volume variance here for our total variable costs whereas
up here we have the sales volume variance based on your revenue so
that our billing dealing with that okay so we determine our unit class periods
here
actual variable cost difference with the actual verbal class on a per unit basis
and im
budgeted variable cost times the actual units or sales volume
variance year was simply the difference between our
flexible on static budget those were based on earth
budgeted variable cost the same on a per-unit basis but the difference was
the actual units
difference between actual units here flexible budget in the budget unit here
from the static budget
okay so that's our sales volume variance here and that's based on our
variable cost unit here so far contribution margin
that simply again the difference here between our
revenues up here inner total variable cost here
however you look at it so if you look at it an hour per unit basis your
contribution margin
you can have some budgeted units your time some budgeted contribution margin
here
up for static Mr I'm per unit basis
and then over here further actual amount would be actual units time some actual
contribution margin
so are for our price cost variance that simply looking at her
actual contribution margin here a difference we are an actual contribution
margin here
in our budget contribution margin that's the difference the actual units are the
same just back to those out here so that's our price cost variance
on a contribution margin basis then our sales volume variance is simply the
difference between what
are actual unit here in our budget units
times the budgeted contribution margin per unit
cousin that's what stays the same to you see what's going on here
okay so now we stepped down to our operating income here
and that's really the difference between our are
8 our contribution margin we have here and our
fixed overhead amount that we hear so looking at at
in these terms here so weaves let's look at your weather
static budget again
the diff the deal here is that you figured out your contribution margin
up about here but when you're dealing with the
flexible budget in the static budget they have the same
up budgeted fixed overhead here and it per unit basis
those are the same say in there but between your
actual budget here our actual month and your
flexible budget there is a different there can be a difference
but looking at sales volume variance here
all we're looking at is taking our budgeted price
difference between our budget a price in our budget variable cost on a per unit
basis
times our actual units a difference between actual unit here
in our budget your thoughts here so are looking up here just in a contribution
margin
actual unit here for the flexible budget budgeted units here for the static
budget so that different
but then one week at over here to you our budget price
where did we get that from that came up above here
in budget variable cost you just looking at your up
budgeted price here those would be that those revenues
that we're looking at here above in the budget you're just looking at your
revenues minus year
budgeted variable cost here basis so that's your
overall sales volume variance here okay so let's go and let's look at it
now i'll just summarize that table we went through here for
sale the variance analysis here and these are the formulas that we went
through here
and that we develop in now all the SOP formulas here all the variables in these
formulas here are on a per unit basis
so starting out where their total operating income variance
that is what we call our sales volume variance again for operating income
that would be the difference between our budget price in our budget very ok bro
cost EUR per unit basis
times the difference here between our actual units sold
and our budget units I that were meant to be saltier
okay so that's for our I total operating
income variance now looking at our total contribution margin variance that's
broken down between our price and cost variance here
for the contribution margin in our sales volume variance here
again for the contribution margin so looking at our price or cost
a variance here that would be taking our actual contribution margin
i the difference between the actual contribution margin on a per unit basis
in the budget contribution margin and that
difference times the actual number units that were so
an undercurrent under the price it cost variance here for the contribution
margin
we have that broken down between our sales price variance here that would be
the actual price
difference between the actual price per unit in the budget a price per unit
times the
actual number you know if that were so in that would be under the revenues
section in the end under variable cost section
that would be our unit cost variance here that would be the actual variable
cost
difference between actual variable cost here in their budget variable costs on a
per unit basis
times the actual number units that were so
now moving over to our contribution margin over here for sales volume
up that would be the difference between the actual units that were sold
in the but did it and the budget units that were
to be salt that different times the budgeted contribution margin on a per
unit basis
that would be our sales volume variance and then on our sales volume variance
that can be broken down
between your revenues part that would under revenues that would be the actual
unit so
difference between actual units sold and the budget units all
times the budget price per unit here in and for the cost part
where the variable caught under variable cost that would be action difference
between the actual unit sold
in the budget unit so times the budgeted variable cost
per your here okay so we've looked at this so
total contribution margin variance here either
we can look at through the east two variances here between our
price cost for the contribution margin here or the sales volume
for contribution margin and then for the weekend break it down between these
other for variances that we looked at we under our
price cost variance here we have the sales price variance
in the unit cost parent in and then there are sales volume variance
we have their revenue part in our cost per
okay so let's just going through this diagram review we reviewed those
formulas that we looked at
for lot we did we had done here for those
the sales fell variance analysis now let's just go over here
and look go through our key here as a reference sale what happened
going through is these different down big questions here so
a you stands for the actual units sold be you stands for the budgeted units
sold
8p Eagles at re actual average
sales price here in BP equals the budgeted
sales price here AV all that would be the actual units
a variable cost here actual unit variable cost everything is on a unit
basis here
now the Bevo here that's the budget unit variable cost
eighty VC is the actual total unit variable cost here
that would be the okay actual told unit variable cost
BVC here's the budgeted total unit variable cost
ATF always the actual fixed overhead in her looking at the total amount here
be after all would be the budgeted fixed overhead again the total amount here
ACM is the actual contribution margin
on a per unit basis BCM is the budget contribution margin
on it per up cunt on a per unit basis the only thing that
would be the total amount here would be the actual fixed overhead
in the budgeted fixed overhead everything else would be on that per
unit basis so
this is the reference key and you can go back and go through the
up video using these references here
to determine what would be included in the formulas
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