MIDWEST ICE CREAM
MANAGEMENT ACCOUNTING
COMMENTING REPORT
GROUP #3
ALEENA PAUL
1411073
BISHAN DAS
1411087
GAJENDRA KANSE
1411100
PARTHA HALDAR
1411113
SHAUNAK DEY
1411127
Case Overview Midwest Ice Cream serves as an example to examine a planning and control system. Useful management information, which otherwise would not be apparent, is derived by preparing a basic profit variance analysis. This illustrates how the company is doing many things "wrong," which are covered up by a growth in the overall ice cream market.
Question 1 Review the variance analysis in exhibit 4 being certain you understand it
Presenting group’s views
The presenting group started analyzing the category-wise profit variance. They divided the expenses in 5 categories, …show more content…
Also the Industry volume has increased and the product mix has changed leading to favorable net sales.
4. Also the variance in operations of the company was calculated to be unfavorable chiefly contributed to the unfavorable variance in advertising and manufacturing. The unfavorable manufacturing was caused due to unfavorable price variance, cartooning labor and spoilage.
Question 2
Calculate the gross margin mix variance, then calculate a detailed (i.e., flavor-by-flavor) Mix variance. For what purposes would the detailed analysis be more useful than the aggregate mix variance calculation?
For calculating the gross margin mix variance, the presenting group used the overall budgeted contribution margin and then calculated the forecast sales at budgeted mix, actual sale at budgeted mix and actual sale at actual mix thereby obtaining the sales mix variance.
Further, the presenting group has categorized the Sales mix variance and Quantity variance into entries for each flavor. This is available in Appendix1.
Commenting Group’s Views
The calculation of Gross Margin Mix Variance and Mix Variance categorized by each flavor by the presenting team was in line with our …show more content…
Learnings
1. When the increase or decrease of the markets of different shares are independent of each other it is always better to use a detailed mix variance analysis because it helps us understand in which of the products the sales mix variance is unfavorable and which ones exhibit favorable sales mix variance.
2. This is helpful because examining just the overall sales mix variance for all the products would not help us identify which products are the profit bearers, while which ones lead to a loss. This will help understand the reasons behind the profit making products’ profits, and help us plan the corrective course for the loss making products, taking into account the learnings from the analysis of the profit leaders.
Question 3
How would you modify Frank Roberts’ variance analysis before explaining the $71,700 F profit variance to the board of directors?
Presenting Group Views:
To better visualize the variances, these can be analyzed as below-
Profit Variance Manufacturing Expense
MANAGEMENT ACCOUNTING
COMMENTING REPORT
GROUP #3
ALEENA PAUL
1411073
BISHAN DAS
1411087
GAJENDRA KANSE
1411100
PARTHA HALDAR
1411113
SHAUNAK DEY
1411127
Case Overview Midwest Ice Cream serves as an example to examine a planning and control system. Useful management information, which otherwise would not be apparent, is derived by preparing a basic profit variance analysis. This illustrates how the company is doing many things "wrong," which are covered up by a growth in the overall ice cream market.
Question 1 Review the variance analysis in exhibit 4 being certain you understand it
Presenting group’s views
The presenting group started analyzing the category-wise profit variance. They divided the expenses in 5 categories, …show more content…
Also the Industry volume has increased and the product mix has changed leading to favorable net sales.
4. Also the variance in operations of the company was calculated to be unfavorable chiefly contributed to the unfavorable variance in advertising and manufacturing. The unfavorable manufacturing was caused due to unfavorable price variance, cartooning labor and spoilage.
Question 2
Calculate the gross margin mix variance, then calculate a detailed (i.e., flavor-by-flavor) Mix variance. For what purposes would the detailed analysis be more useful than the aggregate mix variance calculation?
For calculating the gross margin mix variance, the presenting group used the overall budgeted contribution margin and then calculated the forecast sales at budgeted mix, actual sale at budgeted mix and actual sale at actual mix thereby obtaining the sales mix variance.
Further, the presenting group has categorized the Sales mix variance and Quantity variance into entries for each flavor. This is available in Appendix1.
Commenting Group’s Views
The calculation of Gross Margin Mix Variance and Mix Variance categorized by each flavor by the presenting team was in line with our …show more content…
Learnings
1. When the increase or decrease of the markets of different shares are independent of each other it is always better to use a detailed mix variance analysis because it helps us understand in which of the products the sales mix variance is unfavorable and which ones exhibit favorable sales mix variance.
2. This is helpful because examining just the overall sales mix variance for all the products would not help us identify which products are the profit bearers, while which ones lead to a loss. This will help understand the reasons behind the profit making products’ profits, and help us plan the corrective course for the loss making products, taking into account the learnings from the analysis of the profit leaders.
Question 3
How would you modify Frank Roberts’ variance analysis before explaining the $71,700 F profit variance to the board of directors?
Presenting Group Views:
To better visualize the variances, these can be analyzed as below-
Profit Variance Manufacturing Expense