Actual sales revenue compared with budgeted revenue has decreased by 5.14%.

This is due to
change in Qty and price. Sales price of both RLE and ICL has decreased and Sales quantity of ICL is
also decreased.

The Sales price has decreased to overcome the competition from EOS Co that is the
merged company. Sales price variance indicates the same.

Sales mix variance is adverse because the actual proportion of high contribution
generating treatment of ICL is 18% compared to the standard proportions of 26% whereas the
proportions of least contribution generating treatment has increases.

The actual Qty of RLE is more than that of budgeted qty because RLEis suitable for patience in
the age group of more than 40. In sealand 20% of the population is more than 65(more than 40)
compared to 15% 10 years ago.

The increase in percentage of patience qualifying laser treatment which is less

complex of two procedure has increased. This also severely affected the market. Clear Co reduces its
price to overcome this issue which leads to adverse total sales variance. Reduction in price helps
clear co to increase the sales quantity by .39% compared with the budgeted quantity.

The Overall performance of the clear co is disappointing.

Total requirement of Division b is 180 unit there is an idle capacity of 150 unit of div a that is 350-
200 =150 utilising 150000 for meeting requirement of div b will incur cost of 7 per unit since cost to
buy is 13 this 150000 units has to be utilized to meet the requirement of div b.

Increamental cost due to external purchase is 6 (13-7) and

contribution from external sale will be 7 (15-3-4-1). Since increamental cost is less than contribution
div b is advised to purchase 30000 units from external supplier and div a will be advised to sell
200000 units to external market.