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Dear John,
Hope you are doing great. I had a doubt in Sales Variances calculations. Example 1.. The total Sales Variance is 16800 Adverse.
If i calculate Sales Volume variance i get 2800 Favourable – Actual Volume- Budget volume * 7
If i calculate sales price variance i get 16800 A ( Actual Sales – Sales at Standard price) which is again 16800 Adverse.
Unlike other cost variances there is no mathematical linkage in Sales Variance ?
become 2800 favourable and 16800 adverse takes it to 14000 adverse which is not the total variance.
Kindly clarify..
Thanks..
AmitThere is no mathematical linkage because we are looking at the effect on the profit.
If sales volume changes the the expected profit will obviously change.
Similarly if the sales price changes then the expected profit will change.However adding them together means nothing in the case of sales variances.
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