Annual Plan

Annual Plan:-


Control Four sets of analyses can be useful for annual plan control. SalesAnalysis Sales analysis measures and evaluates actual sales in relationship to goals. Two specific tools make it work. Sales-variance analysis measures the relative contribution of different factors to a gap in sales performance. Suppose the annual plan called for selling 4,000 widgets in the first quarter at $1 per widget, for total revenue of $4,000. At quarter’s end, only 3,000 widgets were sold at $.80 per widget, for total revenue of $2,400. How much of the sales performance gap is due to the price decline, and how much to the volume decline? This calculation answers the question: Variance due to price decline: ($1.00–$.80) (3,000) $ 600 37.5% Variance due to volume decline: ($1.00) (4,000–3,000) $1,000 62.5% $1,600 100.0% Almost two-thirds of the variance is due to failure to achieve the volume target. The company should look closely at why it failed to achieve expected sales volume.

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