The owner of the small business Wivenhoe Wines has completed a report analysing the results of the business for the quarter ended 31st December. He has compared the actual results with the original budget for the quarter. As budgets are only estimates, the business has a policy of not investigating differences between the actual and budgeted figures

(variances) of less than $1,000. None of the variances is greater than $1,000, so the owner believes the results are reasonable, even though profit is $850 less than planned.

You have discovered that the original budget expected sales of 650 bottles of wine for the quarter, but in fact 700 bottles were sold. You are concerned that, given 700 bottles were sold, the profit should have been greater than budgeted, not less. Can you think of a way of presenting the report that would improve the analysis?

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Sales Variable costs Contribution margin Fixed costs Profit Wivenhoe Wines Income statement Analysis For the quarter ended 31st December Oct-Dec Actual Oct-Dec Budget Variance 19 600 19500 100 5 950 5 200 -750 13 650 14300 -650 4.000 3800 -200 9 650 10500 850