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VARIANCE ANALYSIS

Hi there anyone.. please help me to answer this question.


JSSB is considering outsourcing its account receivables function, a support service in finance department. JSSB's cost management analyst aspect annual benefit that include persoanl cost saving of RM150,000, facilities saving of RM 100,000
and other related cost savings of RM 70,000. The analyst also estimated anual cost of outsourcing the function to include the contract cost to ASSB of RM130,000, termination cost of dismissed persoanl of RM30,000 and contract administration cost of RM15,000.

REQUIRED

JSSB did outsource the accounts receivables function. Based on actual data, the cost management analyst had obtain the amount of persoanl cost saving of RM90,000, facilities of RM60,000 and other related cost saving of RM50,000. Two months after JSSB outsource the function, JSSB unexpectedly loss their major customer. The contract loss was RM30,000. No loss on services quality was incurred. Actual contract cost to ASSB was RM150,000, termination cost RM50,000 and contarct administration cost of RM20,000. In addition, customer billing complaint was lower, sales growth was lower and employee turnover in other support service areas was higher. Prepare variance analysis for the data that you just obtain from the cost management analyst.

Thanks in advance :+1 :)
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