Dallas Consulting Group

Topics: Variance, Sales variance, Budget Pages: 4 (1025 words) Published: June 28, 2011
Dallas Consulting Group
Profit Variance Analysis
Strategic Issues and Observations:
The Dallas Consulting Group provides business strategy and operations management consulting services for its clients. Three consultant partners of the company help their clients in cost reduction by using different techniques like time streamlining production and reengineering operations. Since the company is making $80,000 more profit than expected in year 2009, one of the partners, Dave Lundberg pointed out that there isn’t such a need to analyze the profit variance. However, the other partner Adam Dixon was thinking the opposite and he gathered some data to reflect some points in the reasons of this profit variance. At DCG, every partner was working from home and all of them were getting same compensations regardless of the work and effort they put on the table and they were spending most of their time working on the operations of the client. These compensations were the largest part of the operation expenses for the company. Reengineering and streamlining production are two main services DCG provides for its clients. All the clients were being charged based on the spend work hours on their project. Due to this pricing strategy, it is obvious that the pricing variance of DCG can be a result of different good and bad grounds.

Evaluation and Analysis:
The data summarized by Adam can be seen below:

Table 1: Profit Variance Analysis
Actual Budget| | Flexible Budget| | Master Budget|
Atual Market Size| 112,000 Hrs| | | Atual Market Size| 112,000 Hrs| | | Budgeted Market Size| 150,000 Hrs| | Actual Market Share| 0.125| | | Actual Market Share| 0.125| | | Budgeted Market Share| 0.1| | Actual Total Quantity| 14,000 Hrs| | | Actual Total Quantity| 14,000 Hrs| | | Budgeted Total Quantity| 15,000Hrs| | Actual Mix| | | | Actual Mix| | | | Budgeted Mix:| | | Reengineering| 0.142857143| | | Reengineering| 0.142857143|...
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