Part 2. Variance analyses

In fact, fewer and fewer people want to see reality in the face, and free themselves from the grip of the Matrix. A year later, the Matrix company therefore recorded the following achievements for N + 1:

	Red pills	Blue pills
Actual quantity produced (units)*	100	720

* Please note that, to calculate the cost variances, it will therefore be necessary to consider the quantities (of finished products) to be produced from the production budget calculated in the Budget section , as well as the other budgetary data pertaining to raw materials and direct labour.

In addition, the costs of raw materials and direct labour were in reality:

Actual unit cost of Zion Powder (per kg)	3,000	The cost is in line with what was expected
Actual unit cost of gelatin (per kg)	1,700	A Sentinel attack during the year made the extraction of gelatin more difficult
Actual cost per hour of direct production labour	19	A social movement of the inhabitants of Zion pushed Morpheus to agreed with a salary increase

In addition, the quantities actually consumed of raw material and direct labor in the production of the pills were:

Actual total quantities consumed	Red pills	Blue pills
Total Zion powder raw material (kg)	3,1	0
Total gelatin raw material (kg)	4.2	13.5
Total direct production labour (hours)	800	1000

In addition, the sales data actually realized for Y + 1 are as follows:

	Actual unit sales price	Actual quantities sold (units)
Red pills	350	100
Blue pills	230	720

These are to be compared to the sales budgetary data, as given in the first part of this test. Finally, the market size that had been anticipated was 1,000 units. In reality, the market size was for Y + 1 of 1,050 units.

Part 2: Variance Analysis (10 points)

Q6. For red pills, calculate the level 2 of cost variances (variances on flexible budget and on sales volume). Interpret the results obtained.

Q7. For red pills, calculate the level 3 of cost variances (price and efficiency variance). Interpret the results obtained.

Q8. For blue pills, calculate the level 3 cost variances (price and efficiency variances). Interpret the results obtained.

Q9. For the blue and red pills, calculate the level 2 revenue variances (price and quantity variances). Interpret the results obtained.

Q10. Calculate the level 4 of revenue variance (variance on market share and market size). Interpret the results obtained.