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Operating income variance
Operating income variance is the difference between actual operating income and master budget income. It tells whether the firm achieved the budgeted operating income, but it does not identify the causes of any deviation.
Master budget variance
Master budget variance is the same thing as operating income variance
Sales volume variance
Sales volume variance is the difference between the flexible budget amount and the master budget amount. It shows how changes in sales volume affect operating income.
Reasons for sales volume variance (5)
- market for the product has changed
- market share loss
- incorrect goals
- inappropriate selling price
- ineffective marketing
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