Question

What can be the major causes of unfavourable variances and favourable variances against the
budget in a sales department of a fashion organisation?

Answer 1

Answer :-

Despite the fact that there can be the different reasons of good and negative changes , yet beneath are the real reasons for these fluctuations in a business office:

Favorable Variances:-

1.Unit deal cost is higher than planned :

Because, higher cost will create higher income, which will have great effect while contrasting and spending plan.

2.Sale volume (amount) is more noteworthy than planned :-

Because, higher volume will create higher income, which will have ideal effect while contrasting and spending plan.

Unfavorable Variances :-

1. Unit deal cost is lower than planned :

When item units are sold at lower cost than planned, it will make a horrible difference while contrasting and spending plan.

2. Deal volume (amount) is not exactly planned :

When item units deals amount is lower than planned, it will make a troublesome fluctuation while contrasting and spending plan.