All 38 Variance Analysis questions
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Budgeting & Forecasting › Variance Analysis

How do you interpret an operating statement under marginal costing?

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Answer

Under marginal costing, the operating statement starts from budgeted contribution, applies the sales volume variance at standard contribution to get the flexed contribution, then the sales price and variable cost variances to get actual contribution, and finally deducts the fixed overhead (with only an expenditure variance) to reach actual profit.
Real-world example The marginal-costing operating statement reconciles budgeted to actual profit via contribution-based variances.

Common follow-ups: Why value volume variance at contribution here? | What fixed-overhead variance appears?

Flexible Budgets The Master Budget Variance Analysis
All 38 Variance Analysis questions