Selling price ID: 453094
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December/January 2003/04If you can understand the straightforward logic behind variances, you wonÕt have towaste time and effort remembering the relevant formulas when you come to revise Selling price£12 per packetSales1,000 packets Fixed overheads£2,500 1 Budget data for Landscape Selling price£12.05 per packetSales 960 packetsProduction1,050 packetsRaw material cost£1.18 per mRaw material usage5,300mLabour rate£3.90 per hourLabour110 hoursJoule rate£0.022 per jouleJoules15,000Fixed overheads£2,600 2 Actual data for Landscape December/January 2003/04 Paramount picturesItÕs a simple idea: identify whoÕs best at an activity that your organisation needstoimprove and learn from what they do. So why isnÕt everyone benchmarking? / -+ . / -03 % =72022+& ,##$ / -0*22 % 01 +22)01 722& ! Grahame Steven is a lecturer at NapierUniversity, Edinburgh Cost of sales£6,432Material price variance£106Material usage variance-£60Labour rate variance£11Labour efficiency variance-£20Variable overhead expenditure variance-£30Variable overhead efficiency variance£15 £22 Gross profit£5,158Operating expenses£2,600 Net profit£2,558 4 Actual results for Landscape Budgeted net profit£2,800Sales price variance£48Material price variance£106Material usage variance-£60Labour rate variance£11Labour efficiency variance-£20Variable overhead expenditure variance-£30Variable overhead efficiency variance£15Fixed overhead variance-£100 Actual net profit£2,558 5 Reconciliation for Landscape Cost of sales£6,700 Gross profit£5,300Fixed overheads£2,500 Net profit£2,800 3 Total budget for Landscape ! "##$ ) ) % ! & % ! & 4 ) /!% &@ " /!% &@ /!% &@ /!% & ) 9 A 4 B