variance working for financial figures

1. Boston Creamery Case Study On variance for “Profit planning and control” systems

2. Participants Neeta Pai B018 KishoriSawant B038 KavitaShetty B027 AlpanaPawar B039 Vishal Agarwal B001 Karan Mehta B015

3. Boston Creamery Case Study Case deals with design and use of formal profit planning and control systems. It was originally set in an ice cream company in 1973, a few years before the advent of “Designer Ice cream”. Case Study revolves around four characters: Jim Peterson – President Frank Roberts- Vice President for Sales and Marketing John Parker – Vice President for Marketing and Operations John Vance (CPA)- Controller

4. Boston Creamery Case Study Boston Creamery is an Ice cream Company which manufactures and distributes ice cream to wholesalers and retailers. A new Financial Planning and control system has been installed to compare budgeted results against actual results. The tool is used to highlight things that needed corrective actions or commend things that resulted in a favourable overall variance.

5. What is Variance Comparison between actual and budgeted performance. Variance can be Favorable or unfavorable. It helps to trace the origin and causes of unfavorable variances. Success of variance analysis depends on how quickly and effectively the corrective actions can be taken and analyzed. Calculation of variances is not an end in itself but means to the end.

6. Act -1 Jim Robertson- President Frank Roberts- Vice President for Sales and Marketing

7. Draft submitted by Marketing VP

8. Act -2 Jim Peterson – President John Parker – Vice President for Marketing and Operations

9. Draft submitted by Operations VP Market Growth = STD Margin * (Budgeted Industrial Volume - Actual Industrial Volume ) * Market share. Market Growth = 0.4539 * (11440000-12180000) * 0.5 = 167600 (F) Market Share = STD Margin*(Budgeted Volume in liters -Actual Volume in liters) Actual Growth in Market Share = 0.4539 * (5720000 - 5968000 ) = 112567 Total Manufacturing cost = Budgeted Manu. Cost - Actual Manu. Cost = (99,000) Manufacturing cost deducting cost incurred by wrong forecasting = 99,000 – 80,700= 18,300 Proposed Growth in Market Share = 167600 Variance = 167600 - 112567 = 55300 approx

10. Product Mix

11. Act-3 Jim Peterson – President Frank Roberts- Vice President for Sales and Marketing John Parker – Vice President for Marketing and Operations John Vance (CPA)- Controller

12. Variance Analysis as per John Vance

13. Manufacturing Cost of Goods Sold

14. Recommendations

15. THANK YOU