splitting variances into planning and control factors

wolfe

hey everyone! can someone please explain to me what are planning and control factors into which the variances are split?? any help is appreciated

crispy

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.

wolfe

thank you crispy

hi .thanks alot for crispy. you have been a great help.thanx again