2000 Volume 9 Issue 1 Pages 133-150
The purpose of this paper is to propose a new method that analyzes the sales variance generated by two factors.
Sales volume is the main evaluation measure that recognizes business activities. Therefore, when the sales volume is defined as a product of two factors, sales variance analysis is widely applied to analyze the variance between two sales volumes, for instance, the budgeted and the actual. Many people use the traditional methods― 3-variate analysis and 2-variate analysis― in their practice. However, the validity of such analysis by these methods is still questionable. But this problem may not have been completely solved yet, although the development of various methods that properly analyze it has been tried by many researchers.
In this paper, first of all, I classify the types of managing the sales volume into four groups and make clear the significance of sales variance analysis. Then, I review four main conventional methods, and make clear that they cannot be applied properly, because of some faults. Third, I propose a new method (a formula) that properly divide the sales volume variance into two factors in a mathematical way using vector analysis. Finally, this proposed method is confirmed to be useful through several numerical examples.
When we use the method proposed in this paper, we will be well able to manage the sales volume and its two factors because we can analyze the sales variance more effectively.
