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Variance analysis - case study


Specialty Foods Ltd

Tong Lui, the new management accountant, has just completed his first month's work. He has entered a huge amount of data into the finance and accounting system and is now faced with a pile of reports. One such report is shown below:

Specialty Foods Ltd. Profit Report: June (Units - $)

Plan Actual Variance
Profit 10,000 9,000 (1,000)
Sales 110,000 120,000 10,000
Costs 100,000 111,000 11,000

Explain the meaning of the above report.