Essay About Original Budget And Variance Analysis Schedule

Boston Creamery
[pic 1][pic 2][pic 3][pic 4]Question 1 1.- What changes, if any, would you make in the variance analysis schedule proposed by Frank Roberts?Can the suggestions offered by Jim Peterson be incorporated without making the schedule too technicalThe Variance Analysis schedule is a simple variation comparison vs. three exercises:1) Original budget, 2) Revised budget that updates only volume and sales and keeps the same unitary costs and 3) Actual YTD figuresThe variances identified by Jim Peterson, are categorized in Volume (Sales) and Operational of the Actual figures vs the original budget:[pic 5]However, this only tries to explain the amount in the variations per concept, yet does not explain where the variations come from and what issues should be solved for the next budget / exercise.                                                                                                        – Set Targets and always compare vs them                                                                        Original budget is not properly forecasting a new period, as it only takes last year volume and unit costs and is not aligned to a real Sales growth target, and Marginal Contribution Target and Income Target.                                                                        – Identify variances by Price / Cost and Volume                                                 Sales variances should identify changes in sales due to volume, price and mix (see below when talking about incorporating Jims proposal).                                                                                                                In the schedule, volume variations dont explain if they come from Sales or variable costs, yet it’s important to separate both in different types of analysis, as they should have different strategies and actions to improve / optimize.