New Look Jackets Inc.: Variance Analysis for 2012 
New Look Jacket Inc.
Memorandum
Date: April 11, 2013
To: CEO
From: Controller
Subject: Variance Analysis for 2012
Introduction
New Look Jackets Inc. (NLJ) is a well-established manufacturing company that makes leather and nylon jackets. The company has many long standing customers due to their excellent service and quality of products. In 2012, they had some difficulty with quality and filling orders on time due to the increase of demand to the leather jackets. A variance analysis has been completed and this report will break down the results.
Sales Volume Variance Analysis
The sales volume for NLJ is favourable as a whole because 10,000 more jackets were sold then budgeted. The sales volume for the nylon jacket is unfavourable because 1,500 fewer jackets were sold then budgeted. However the leather jackets sales volume is favourable because 11,500 more jackets were sold.
After taking a closer look at the sales volume and breaking the variance into sales mix and sales quantity. The leather jackets have a favourable sales mix but the nylon jackets have an unfavourable mix; the overall sales mix is favourable. The overall favourable sales mix is favourable because of the high increase in leather jackets sold. The sales mix was budgeted at 95% Nylon and 5% Leather but the actual was 85% Nylon and 15% Leather. The actual sales mix was a composite unit consists of 0.85 units of sales to the Nylon jackets and 0.15 units of sales to the Leather jackets. The reason for this favourable variance is due to the increase in demand of leather jackets. The marketing team did not foresee this trend therefor did not include the increase of leather jackets in the 2012 budget. NLJ has a favourable sales quantity variance due to the total jackets sold exceed the budgeted jackets. They have a $139,625F sales quantity variance because sold 10,000 more jackets then what was budgeted. It can also be stated as 10,000 X $13.9625 (see appendix 1) = $139,625F. The
Memorandum
Date: April 11, 2013
To: CEO
From: Controller
Subject: Variance Analysis for 2012
Introduction
New Look Jackets Inc. (NLJ) is a well-established manufacturing company that makes leather and nylon jackets. The company has many long standing customers due to their excellent service and quality of products. In 2012, they had some difficulty with quality and filling orders on time due to the increase of demand to the leather jackets. A variance analysis has been completed and this report will break down the results.
Sales Volume Variance Analysis
The sales volume for NLJ is favourable as a whole because 10,000 more jackets were sold then budgeted. The sales volume for the nylon jacket is unfavourable because 1,500 fewer jackets were sold then budgeted. However the leather jackets sales volume is favourable because 11,500 more jackets were sold.
After taking a closer look at the sales volume and breaking the variance into sales mix and sales quantity. The leather jackets have a favourable sales mix but the nylon jackets have an unfavourable mix; the overall sales mix is favourable. The overall favourable sales mix is favourable because of the high increase in leather jackets sold. The sales mix was budgeted at 95% Nylon and 5% Leather but the actual was 85% Nylon and 15% Leather. The actual sales mix was a composite unit consists of 0.85 units of sales to the Nylon jackets and 0.15 units of sales to the Leather jackets. The reason for this favourable variance is due to the increase in demand of leather jackets. The marketing team did not foresee this trend therefor did not include the increase of leather jackets in the 2012 budget. NLJ has a favourable sales quantity variance due to the total jackets sold exceed the budgeted jackets. They have a $139,625F sales quantity variance because sold 10,000 more jackets then what was budgeted. It can also be stated as 10,000 X $13.9625 (see appendix 1) = $139,625F. The