Beta is the subsidiary of a USA oil company. It manufactures and sells products derived from petroleum refined by other companies in the group. The Alpha division manufactures only one product made from materials produced internally; materials bought externally; the adjunct of additives. The additives lead to increases in the selling price.

Required:

In December we have to produce estimates at year end and an analysis of the main variances anticipated. On which parameters should we focus? In which order?

\begin{tabular}{llllll} & & 2016 & 2017 & 2018 & 2019 (estimated) \\ \hline Sales (raw product) & vol (Kt) & 50 & 52 & 55 & 57 \\ Market share & % & 50.0 & 51.0 & 50.0 & 49.6 \\ Price & M$/t & 14.15 & 14.28 & 14.34 & 14.42 \\ \hline Sales (raw product) & M$ & 707.5 & 742.6 & 788.7 & 821.9 \\ Premium (additives) & M$ & 80 & 91 & 105 & 101 \\ \hline Sales & M$ & 787.5 & 833.6 & 893.7 & 922.9 \\ Volumes purchased & Kt & 60.0 & 61.2 & 63.7 & 65.7 \\ Unit purchasing cost & K$/t & 5.62 & 5.68 & 5.96 & 5.90 \\ Purchases & M$ & 337.2 & 347.6 & 379.7 & 387.6 \\ Energy & M$ & 10.8 & 11.1 & 11.8 & 12.3 \\ Additives & M$ & 12.0 & 13.7 & 15.8 & 15.2 \\ \hline Variable cost & M$ & 360.0 & 372.4 & 407.3 & 415.1 \\ Manufacturing fixed cost & M$ & 210.0 & 212.1 & 234.8 & 237.8 \\ Overheads (Alpha) & M$ & 75.2 & 76 & 77.1 & 78.1 \\ Overheads (Beta) & M$ & 90 & 91.8 & 93.7 & 95.6 \\ \hline Total fixed cost & M$ & 375.2 & 379.9 & 405.6 & 411.5 \\ Total cost & M$ & 735.2 & 752.3 & 812.9 & 826.6 \\ \hline EBIT & M$ & 52.3 & 81.3 & 80.8 & 96.3 \end{tabular} \begin{tabular}{llllll} & & 2016 & 2017 & 2018 & 2019 (estimated) \\ \hline Sales (raw product) & vol (Kt) & 50 & 52 & 55 & 57 \\ Market share & % & 50.0 & 51.0 & 50.0 & 49.6 \\ Price & M$/t & 14.15 & 14.28 & 14.34 & 14.42 \\ \hline Sales (raw product) & M$ & 707.5 & 742.6 & 788.7 & 821.9 \\ Premium (additives) & M$ & 80 & 91 & 105 & 101 \\ \hline Sales & M$ & 787.5 & 833.6 & 893.7 & 922.9 \\ Volumes purchased & Kt & 60.0 & 61.2 & 63.7 & 65.7 \\ Unit purchasing cost & K$/t & 5.62 & 5.68 & 5.96 & 5.90 \\ Purchases & M$ & 337.2 & 347.6 & 379.7 & 387.6 \\ Energy & M$ & 10.8 & 11.1 & 11.8 & 12.3 \\ Additives & M$ & 12.0 & 13.7 & 15.8 & 15.2 \\ \hline Variable cost & M$ & 360.0 & 372.4 & 407.3 & 415.1 \\ Manufacturing fixed cost & M$ & 210.0 & 212.1 & 234.8 & 237.8 \\ Overheads (Alpha) & M$ & 75.2 & 76 & 77.1 & 78.1 \\ Overheads (Beta) & M$ & 90 & 91.8 & 93.7 & 95.6 \\ \hline Total fixed cost & M$ & 375.2 & 379.9 & 405.6 & 411.5 \\ Total cost & M$ & 735.2 & 752.3 & 812.9 & 826.6 \\ \hline EBIT & M$ & 52.3 & 81.3 & 80.8 & 96.3 \end{tabular}