Hi all,
I have a question on a subject which I thought was easy to solve, but I am scratching my head as I do not seem to find a solution.
I am making a simple analysis of the variance of the actual vs budget production cost/unit.
The formula is: A x B / C , where
A = number of resources
B = rate of the resources
C = production volume
If I budget 5 resources, with a rate of 100 dollar/unit, and produce 200 units, the budgeted cost/unit is 2.5 dollar/unit
If in actual I use 6 resources, with a rate of 90 dollar/unit, and produce 230 units, the actual cost/unit is 2.347 dollar/unit
So in actual my cost/unit is -0.152$/unit better than budget, this is easy.
My question is: what is the formula(s) to breakdown these -0.152 by each of the three contributing factors: resource increase, rate decrease, production increase. That is, can I get three numbers, each linked to the changed resources, rate and production, which would then sum up to -0.152?
Thank you in advance for everyone's help.
I have a question on a subject which I thought was easy to solve, but I am scratching my head as I do not seem to find a solution.
I am making a simple analysis of the variance of the actual vs budget production cost/unit.
The formula is: A x B / C , where
A = number of resources
B = rate of the resources
C = production volume
If I budget 5 resources, with a rate of 100 dollar/unit, and produce 200 units, the budgeted cost/unit is 2.5 dollar/unit
If in actual I use 6 resources, with a rate of 90 dollar/unit, and produce 230 units, the actual cost/unit is 2.347 dollar/unit
So in actual my cost/unit is -0.152$/unit better than budget, this is easy.
My question is: what is the formula(s) to breakdown these -0.152 by each of the three contributing factors: resource increase, rate decrease, production increase. That is, can I get three numbers, each linked to the changed resources, rate and production, which would then sum up to -0.152?
Thank you in advance for everyone's help.