Price and Quantity Variance

-Analyze the drivers of the variance

-May pinpoint what you can control

Your healthcare clinic is responsible for flu shots.

Budget

Actual

Variance

Revenue

400,000

354,750

(45,250) U

Volume

8,000

8,250

250

Price per Flu Shot

$50

$43

$7

Price Variance Formula

(Actual P - Budget P) x Actual V = $

Volume Variance Formula

(Actual Q-Budget Q) x Budget P = $$

Price

Quantity

Total Variance

Problem: If more flu shots were given than budgeted for, why was there less revenue? How much of the Total Variance is due to Price and how much is due to Quantity?

Was Price or Quantity controllable?