MGT 5 Lecture Notes - Lecture 14: Making Money, Income Statement

• School: UCSD
• Department: Rady School of Management
• Course: MGT 5
• Professor: Houskeeper

Document Summary

Since we sold 1200 more units, then the change is favorable. The cm/ went down by sh. 08, so the variance is unfavorable. Expectation of what is going to unfold at the beginning of the accounting period looking back and seeing what actually happened during the accounting period. What the budget allows for at the actual level of activity the change in sales volume in units. To get the volume variance and price variance, multiply the change in units or cm/ by the cm/ or unit # respectively. Budget analysis is important to make sure that the company continues to keep making money. Analyzing a budget can involve an analysis of every single item on the income statement, but for the purposes of this course we will only look at cm. Look at direct labor and raw materials as well as units and cm/