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  • Responsibility Center

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    Feela Naz
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    The document summarizes the analysis of a cost center and revenue center using variance analysis across three levels. For the cost center: at the first level, the total variance was €5,000 favorable; at the second level, the volume variance was €10,000 favorable and efficiency variance was €5,000 unfavorable; at the third level, the use variance was €2,544 unfavorable and price variance was €1,544 unfavorable. For the revenue center: at the first level, the total variance was €280 favorable; at the second level, the volume variance was €600 unfavorable and price variance was €880 favorable; at the third level, the market size variance was €500

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    responsibility center

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    The document summarizes the analysis of a cost center and revenue center using variance analysis across three levels. For the cost center: at the first level, the total variance was €5,000 favorable; at the second level, the volume variance was €10,000 favorable and efficiency variance was €5,000 unfavorable; at the third level, the use variance was €2,544 unfavorable and price variance was €1,544 unfavorable. For the revenue center: at the first level, the total variance was €280 favorable; at the second level, the volume variance was €600 unfavorable and price variance was €880 favorable; at the third level, the market size variance was €500

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    13 views2 pages

    Responsibility Center

    Uploaded by

    Feela Naz
    The document summarizes the analysis of a cost center and revenue center using variance analysis across three levels. For the cost center: at the first level, the total variance was €5,000 favorable; at the second level, the volume variance was €10,000 favorable and efficiency variance was €5,000 unfavorable; at the third level, the use variance was €2,544 unfavorable and price variance was €1,544 unfavorable. For the revenue center: at the first level, the total variance was €280 favorable; at the second level, the volume variance was €600 unfavorable and price variance was €880 favorable; at the third level, the market size variance was €500

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 2

    Cost center

    First level:
    Budgeted cost = 120.000 + 80.000 + 150.000 = 350.000
    Actual cost = 125.000 + 90.000 + 140.000 = 355.000
    Total variance (Primo livello) = 5.000
    Second level:
    Budget:
    - Cost of materials per unit= 120.000/2.000 = 60/u
    - Cost of labour per unit= 80.000/2.000 = 40/u
    - Fixed costs = 150.000
    Actual:
    - Cost of materials per unit= 125.000/2.100 = 59,5/u
    - Cost of labour per unit= 80.000/2.100 = 42,9/u
    - Fixed costs = 140.000
    Flexible budget (1) = 60*2.100 + 40*2.100 + 150.000 = 126.000 + 84.000 + 150.000
    = 360.000
    Volume variance = 360.000 350.000 = 10.000
    Efficiency variance = 355.000 360.000 = -5.000
    Third level (raw materials efficiency variance = -1.000):
    Flexible budget (2) = 120.000/18.750kg * 19.290kg/2.100u * 2.100u = 123.456
    Use variance = Flex (2) Flex (1) = -2.544
    Price variance = Actual Flex(2) = 125.000-123.456 = 1.544
    Revenue centre
    First level:
    Budget revenue = 200u*25/u = 5.000
    Actual revenue = 176u*30/u = 5.280
    Total variance = 280
    Second level:
    Flexible budget (actual share) = 25/u * 176u = 4.400
    Volume variance = Flex (actual) Budget = 4.400 5.000 = -600
    Price variance = Actual Flex (actual) = 5.280 4.400 = 880
    Third level:
    Flexible budget (budgeted share) = 25/u * 200/4.000 * 4.400u = 5.500
    Market size variance = Flex (budgeted) Budget = 5.500 5.000 = 500
    Market share variance = Flex (actual) Flex (budgeted) = 4.400 5.500 = -1.100

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