Variance analysis Flashcards
Mix variances
What is sales quantity variance?
When the number of loaves sold was more or less than expected.
What is sales mix variance?
Is when a product with a higher or lower gross profit were sold than the standard mix would suggest.
What is labour efficiency variance?
Production time per loaf was higher or lower than expected.
What is planning and operating variances?
Separates out variances due to uncontrollable factors (planning variances) from those that should have been controllable (operating variances) which managers can be held responsible for.
How is planning and operating variances calculated?
By revising the origial budget for factors that are out of date, planning variances then compare revised and original budgets whereas operating variance compare actual results with revised budget.
