Identify the various types of variances

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Adapted from Accounting, an introduction (McLaney & Atrill, Prentice Hall) Company Baxter has the following budget & actuals for Q1 of 20XX : in € unless specified Budget Actual Total Per unit Total Per unit

Volume in units 1 000 900 (production & sales)

Sales revenue 100 000 100.0 91 800 102.0

Raw materials in meters 40 000 40.0 37 800 42.0

Raw materials cost per meter 1.2 1.1

Total Raw materials cost 48 000 41 580

Labor in hours 2 500 2.5 2 160 2.4

Labor cost per hour 8.0 8.5

Labor 20 000 18 360

Contribution margin 32 000 32.0 31 860 35.4

Fixed overheads 20 000 20 700

Operating income 12 000 11 160

Assignment:

Question 1: Identify the various types of variances and state whether they are favourable or unfavourable (don't compute them just identify them). Example: the company sold less units (unfavourable)

Question 2: Identify potential reasons for each of these variances Example: the company sold less units because there was an economic downturn, because a new competitor launched a better product etc.

Reference no: EM132497353

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