splitting variances into planning and control factors
wolfe
Registered Posts: 121 Dedicated contributor 🦉
hey everyone! can someone please explain to me what are planning and control factors into which the variances are split?? any help is appreciated
0
Comments
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Simple transaction to demonstrate:
Original Budget planned to sell 600 units @ £72
Actual result was to sell 600 units @ £ 86
However due to market conditions it was determined that a realistic selling price should of been £ 82. Split into planning and operational variances: -
Operational Variance
Adjusted Standard : 600 units @ £ 82 = 49,200
Actual : 600 units @ £ 86 = 51,600
Variance = £ 2,400 (F)
Planning Variance
Adjusted Standard : 600 units @ £ 82 = 49,200
Original Standard : 600 units @ £ 72 = 43,200
Variance = £ 6,000 (F)
Basically it shows that out of a total variance £ 8,400 (F) - £ 6,000 was due to the original plan being unaccurate and £ 2,400 was due to other factors.
Hope this is of some use.0 -
thank you crispy
hi .thanks alot for crispy. you have been a great help.thanx again0
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