1. The variance analysis schedule that Frank Roberts proposed was not necessarily the best representation of the variances for Boston Creamery. Roberts’ report stated a favorable variance of $71,700 coming mainly from sales volume. He used the revised budgeted operating income and the original budgeted income to come up with the sales volume number. The budget was not detailed as to what accounted for the differences though. That would be the first change to the variance analysis report, provide a clearer depiction of the results. He should show the effect of the changes in market size. The market size variance was actually 117,642 favorable (5,968,366-5,720,329). The suggestions offered by Jim Peterson can be incorporated into the
| 3,000 | 3,000 | $0 | - | Subtotal | $6,172,200 | $6,113,100 | ($59,100) | U | Total Fix Costs | $652,700 | 612,800 | ($39,900) | U | Total | $6,824,900 | $6,725,900 | ($99,000) | U |

3. One of the corrective actions I would take for 1974 based on the profit variance analysis would be to emphasize the importance of forecasting an accurate budget. There seems to be conflict between the divisional managers and that should be addressed. Each person should want to provide the most useful results and not just the results that are the “least technical”. It would also be important to make sure that each division head knows what their responsibilities are in the budget analysis. The areas that deserve commendation in 1973 are obviously the favorable variances that occurred from within the variable costs of Flavors and Additives. For example, the largest part of the operational variance that he accounted for was due to the milk and sugar price variances. Is this an area where the company can control costs or it is out of their control? By showing the sales mix variance for each product you can get an even more depth look at the price variances based on mix and where sales forces should be focusing their attention (see below). The ice cream mix that had the highest standard contribution margin also has the lowest