Using the data in Extract F, calculate the total profit variance for Zara in 2016 - Edexcel - A-Level Business - Question 2 - 2019 - Paper 2
Question 2
Using the data in Extract F, calculate the total profit variance for Zara in 2016.
You are advised to show your working.
Worked Solution & Example Answer:Using the data in Extract F, calculate the total profit variance for Zara in 2016 - Edexcel - A-Level Business - Question 2 - 2019 - Paper 2
Step 1
Calculate the Budgeted Profit
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Answer
The budgeted profit can be calculated by subtracting the budgeted total costs from the budgeted sales revenue:
Budgeted Profit = Budgeted Sales Revenue - Budgeted Total Costs
extBudgetedProfit=20,900−16,204=4,696
Step 2
Calculate the Actual Profit
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Answer
The actual profit can be computed similarly using the actual sales revenue and the actual total costs:
Actual Profit = Actual Sales Revenue - Actual Total Costs
extActualProfit=23,310−18,226=5,084
Step 3
Calculate the Profit Variance
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Answer
The profit variance is determined by finding the difference between the actual profit and the budgeted profit:
