Variance Analysis: Year 6
In this part of the report, we analyze the variances between our pro-forma statements we had projected and the actual results we received from the BPG game. Looking at the variances, it can be seen that most of the numbers compared are not too far apart from each other when comparing our actual numbers to the projected analysis. This is due to the fact our forecast was successful. It was however not 100% accurate in terms of predicting our future numbers.
Looking at the variances for the consolidated income statement for year 6, sales to customers only had a negative 1.3% variance. Since this variance was negative, it indicates that sales were a little less than what was projected, but still very close. For both Cost of Goods Sold and Value added tax a negative 5.8% and 18.9% variance can be seen. This shows that both the costs that go into making the product and the tax were slightly lower than expected. An explanation for this would be that our company only did overtime for one quarter in year 6 instead of the anticipated 3 quarters of overtime. Actual Gross Profit was slightly higher than expected with a positive variance of 2.1%. The resulting percentages are due to the fact that even though sales were slightly lower than what was estimated, the cost of producing them and value added tax were significantly lower.
Our selling expenses did not have any large variances, showing that they were all near the projected numbers. Advertising Expense, Sales Salaries, Sales Commissions, and sales office depreciation were near what was expected and showed a barely noticeable variation from the expected forecasted results. The only two mentionable selling expenses are the General Selling expense and transportation expense due to their minor but noticeable variances of positive 6.9% and negative 7.9%. General selling expense was slightly higher than expected because of our continued hiring of salespeople and because of the fact that we a...
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