Sales Activity Variance Analysis for Teal Mountain, Inc

What is the Sales Activity Variance for Teal Mountain, Inc?

1. -$50

Sales Activity Variance Calculation and Interpretation

The Sales Activity Variance for Teal Mountain, Inc is -$50, indicating an unfavorable variance. This variance is calculated as the difference between the Master Budget Variance and the Flexible Budget Variance.

The Sales Activity Variance measures how changes in sales volume or activity levels impact a company's performance. In the case of Teal Mountain, Inc, the Master Budget Variance is $110, unfavorable, and the Flexible Budget Variance is $160, favorable.

To calculate the Sales Activity Variance, we subtract the Flexible Budget Variance from the Master Budget Variance:

Sales Activity Variance = Master Budget Variance - Flexible Budget Variance

Substituting the given values:

Sales Activity Variance = $110 (unfavorable) - $160 (favorable) = -$50

The negative sign indicates that the Sales Activity Variance is unfavorable. This implies that Teal Mountain, Inc fell short of both the budgeted expectations and the flexible budget projections in terms of sales activity.

It is important for Teal Mountain, Inc to analyze this variance further to understand the underlying factors contributing to the shortfall in sales performance. By identifying areas for improvement in sales strategies, market exploration, or customer relationships, the company can work towards driving future growth and profitability.