ACC 312 Study Guide - Midterm Guide: Income Statement
Document Summary
Determining variance: the dollar change or variance shows changes from previously experienced levels, and will give you an indication of whether your numbers are improving, declining, or staying the same (see figure. To calculate the variance, you would use the following formula: Sales this year sales last year =variance. Effective managers are also interested in computing the percentage variance, or percentage change, from one time period to the next. Thus, your sales percentage variance is determined as follows: (sales this year sales last year)/sales last year = percentage. An alternative and shorter formula for computing the percentage variance is as follows: The dollar differences between identical categories listed on two different income statements is easy to compute and is always the numerator in any percentage change (variation) calculation. The denominator, however, varies: when computing % change or variation in data from:
