Analyse your variance report and make a table according to figures that were favourable and unfavorable.also explain why certain figures were unfavourable and what actions can be taken to correct the unfavorable variance

Answer 1

To provide a comprehensive analysis of a variance report, I will assume generic financial categories that are commonly analyzed in a variance report. For a more accurate assessment, you would need to use the specific figures from your actual report.

### Variance Report Analysis Table

| Category | Budgeted Amount | Actual Amount | Variance | Favorable/Unfavorable |
|------------------------|-----------------|---------------|------------|----------------------|
| Revenue | $500,000 | $450,000 | -$50,000 | Unfavorable |
| Cost of Goods Sold | $300,000 | $320,000 | +$20,000 | Unfavorable |
| Gross Profit | $200,000 | $130,000 | -$70,000 | Unfavorable |
| Operating Expenses | $100,000 | $95,000 | +$5,000 | Favorable |
| Marketing Expenses | $50,000 | $60,000 | -$10,000 | Unfavorable |
| Net Income | $50,000 | -$25,000 | -$75,000 | Unfavorable |

### Explanations and Corrective Actions

1. **Revenue (Unfavorable: -$50,000)**
- **Explanation:** The company generated less revenue than budgeted. This could be due to lower sales volumes, increased competition, or economic downturn.
- **Corrective Actions:**
- Enhance marketing strategies to attract more customers.
- Offer promotions or discounts to boost sales.
- Expand into new markets or customer segments.
- Analyze sales data to identify and fix issues in the sales process.

2. **Cost of Goods Sold (COGS) (Unfavorable: +$20,000)**
- **Explanation:** Higher COGS than budgeted, possibly due to increased raw material costs, inefficiencies in production, or supply chain disruptions.
- **Corrective Actions:**
- Negotiate with suppliers for better rates.
- Improve production efficiency and reduce waste.
- Evaluate and optimize supply chain logistics.
- Consider alternative suppliers or materials.

3. **Gross Profit (Unfavorable: -$70,000)**
- **Explanation:** Lower gross profit due to both reduced revenue and increased COGS.
- **Corrective Actions:**
- Follow the corrective actions for both Revenue and COGS to improve gross profit.

4. **Operating Expenses (Favorable: +$5,000)**
- **Explanation:** The company spent less on operating expenses than budgeted, indicating efficient expense management.
- **Actions:**
- Continue monitoring and maintaining control over operating expenses.
- Look for additional efficiency gains without affecting operations.

5. **Marketing Expenses (Unfavorable: -$10,000)**
- **Explanation:** Marketing expenses exceeded the budget. This could be due to unplanned campaigns, higher-than-expected advertising costs, or investment in new marketing initiatives.
- **Corrective Actions:**
- Review and adjust marketing budget allocations.
- Evaluate the return on investment (ROI) of recent marketing activities.
- Optimize marketing channels based on performance data.
- Implement cost-saving measures such as digital marketing over traditional channels if applicable.

6. **Net Income (Unfavorable: -$75,000)**
- **Explanation:** The combined effect of lower revenue, higher COGS, and increased marketing expenses led to a net loss.
- **Corrective Actions:**
- Implement all corrective actions for revenue, COGS, and marketing expenses.
- Identify and address any other financial inefficiencies.
- Consider temporary cost-cutting measures to stabilize the financial situation.

### Summary

The unfavorable variances in this example indicate areas where the organization did not meet its financial expectations. By taking targeted corrective actions, the company can address these issues to improve its financial performance in future periods. It is important to continuously monitor these categories and adapt strategies as necessary to achieve positive variances.