Boston Creamery, Inc.
Question 1: Recommendations for the variance analysis schedule proposed by Frank Roberts. The variance analysis schedule proposed by Roberts was so general. The draft was less in details and so highly aggregated that it contained several flaws which can mislead the reader. The sales volume variance in his report reflected the effects of changes in units of sales on sales expenses, contribution margins, and operating income. To provide readers with more details, Roberts should break down the sales volume variance in to sales quantity variance and sales mix variance. Based on the result of the sales quantity variance analysis, the readers could see the effect of change in the number of units sold from the number of units budgeted to be sold. A product’s sales mix variance measures the effect on the contribution margin and the operating income attribute to the difference between actual and budgeted sales mix ratios.