Volume/Rate analysis is another tool for business’ whose revenue stream consists of different categories of products or a small number of individual products. This is an actual vs budget/forecast variance and looks at the level below Sales namely units and price and the components of GP$ being Sales $ and GP%.
Sales $ Volume/Price breaks the variance analysis into consideration of unit sales and average price realised by splitting the Sales $ variance into volume and price $ variances. This provides an extra layer of granularity and enables the real issues to be more easily identified.
Obviously, such an analysis requires the production of budget/forecasts with this level of granularity. This detail may not be within the budget document, but the Sales/buying team are likely to have this sort of detail eg. a buy plan, purchase order plans.
In a retail environment this detail should be in the Merchandise Plan.
GP$ Volume/Rate breaks a GP$ variance into Volume (Sales $) and Price (GP%) components.
This level of analysis provides Managers/Owners with information at the level where actions can be taken eg. improve the GP% of a product/category.
I have developed a simple excel file and I am happy to share this no obligations, just contact me.