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Variance Analysis Formula

This document presents formulas for calculating different components of variance in net margin calculations. It breaks down net margin variance into volume variance, margin variance, and marketing expense variance. Volume variance is further broken down into demand variance and share variance. Margin variance is broken down into price variance and cost variance.

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Toulouse18
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50 views1 page

Variance Analysis Formula

This document presents formulas for calculating different components of variance in net margin calculations. It breaks down net margin variance into volume variance, margin variance, and marketing expense variance. Volume variance is further broken down into demand variance and share variance. Margin variance is broken down into price variance and cost variance.

Uploaded by

Toulouse18
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd

NMC Variance:

NMCa-NMCp
= [(Va*Ma)-MEa] - [(Vp*Mp)-MEp]
= VaMa- VpMp-(MEa-MEp)
= VaMa-VaMp+VaMp-VpMp-(MEa-MEp)
= Mp(Va-Vp) + Va(Ma-Mp) - (MEa-MEp)
Volume Variance Margin Variance Marketing Exp.
Variance

Volume Variance:
Mp(Va-Vp)
= Mp(MSa*MDa - MSp*MDp)
= Mp (MSpMDa -MSpMDp + MDaMSa-MDaMSp)
= Mp(MSpMDa-MSpMDp) + Mp(MDaMSa-MDaMSp)
= [Mp*MSp(MDa-MDp)]+[Mp*MDa(MSa-MSp)]
Demand Variance Share Variance

Margin Variance:
Va(Ma-Mp)
= Va[(Pa-Ca)-(Pp-Cp)]
= Va[(Pa-Pp)+(Cp-Ca)]
= Va(Pa-Pp)+Va(Cp-Ca)
Price Variance Cost Variance

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