Absolute difference method
Posted: Sun Dec 22, 2024 10:17 am
The basis of the factor analysis of profit is the mathematical formula PR. It includes three factors that are subject to analysis:
sales volume expressed in physical units;
price;
cost price of one unit of goods.
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Let's consider situations that lead to changes in profit and determine how much it changes under the influence of each factor. When calculating, first the planned factor indicators are successively replaced by their deviations, and then by their actual value. Each situation that affects profit will have its own calculation formula.
Situation 1. Impact of sales volume on profit:
ΔPRvolume = ΔVprod × (Cplan – Sunit plan) = (Vprod. fact – Vprod. plan) × (Cplan – Sunit plan).
Situation 2. Impact of selling price on profit:
ΔPRprice = Vproduct fact × ΔC = Vproduct fact × (Cfact – Cplan).
Situation 3. Impact of unit cost on profit:
ΔPRSed = Vprod. fact × (–ΔSed) = Vprod. fact × (–(Sed. fact – Sed. plan)).
Method of chain substitutions
In this case, the influence of each factor is considered mexico number for whatsapp sequentially, while the others remain unchanged. The basis is the same mathematical formula of the factor analysis model of sales profit.
Method of chain substitutions
Source: shutterstock.com
Let's determine the influence of factors on the amount of profit.
Situation 1. Change in sales volume.
PR1 = Vprod. fact × (Cplan – Sed.plan);
ΔPRvolume = PR1 – PRplan.
Situation 2. Change in selling price.
PR2 = Vprod. fact × (Cfact – Sed. plan);
ΔPRprice = PR2 – PR1.
How to achieve multiple growth in traffic and sales from your website?
Alexey Boyarkin
Dmitry Svistunov
Head of SEO and Development
Read more posts on my personal blog:
I have always been concerned about the issue of moving to a fundamentally new level. So that the indicators would grow not by 2 or 3 times, but by several orders of magnitude. From a thousand visits to ten thousand or from ten thousand to a hundred thousand, if we are talking about a website, for example.
And I know that such leaps are always the result of painstaking work in five areas:
Technical condition of the site.
SEO.
Collection of site semantics.
Creating useful content.
Working on conversion.
And at the same time, every manager needs an increase in sales and the number of applications from the site at the moment.
To get this growth, download our step-by-step template for increasing sales from the site:
Download template
Already downloaded
153116
Situation 3. Change in the cost price of a unit of goods.
PRSed = Vprod. fact × (Cfact – Sed. fact);
ΔPRSed = PR3 – PR2.
The following symbols are used in these formulas:
PRplan - planned profit from sales;
PR1 — profit generated under the influence of the factor of change in sales volume (situation one);
PR2 - profit generated under the influence of the price change factor (situation two);
PR3 - profit generated under the influence of the factor of change in the cost of selling a unit of goods (situation three);
ΔPRvolume is the amount of deviation in profit when the sales volume changes;
ΔPRprice is the amount of deviation in profit when the price changes;
ΔПSed — the amount of deviation in profit when the cost of a unit of goods sold changes;
ΔVprod — the difference between the actual and base sales volume;
ΔЦ — the difference between the actual and base sales cost;
ΔSed — the difference between the actual and base cost of a unit of goods sold;
Vprod. fact — actual sales volume;
Vprod. plan — planned sales volume;
Цплан — planned price;
Cfact - actual price;
Sed. plan — planned cost of one unit of goods sold;
Sed. fact — the actual cost of one unit of goods sold.
Read also!
"Company Marketing Plan: Short and Detailed Versions"
Read more
The results obtained by the chain substitution method coincide with the results obtained by the absolute difference method.
Method of chain substitutions
Source: shutterstock.com
The total deviation of profit is equal to the sum of the deviations arising under the influence of all the factors for which the factor analysis is carried out.
sales volume expressed in physical units;
price;
cost price of one unit of goods.
Read also!
"Examples of Marketing Strategies: From Apple to Barack Obama"
Read more
Let's consider situations that lead to changes in profit and determine how much it changes under the influence of each factor. When calculating, first the planned factor indicators are successively replaced by their deviations, and then by their actual value. Each situation that affects profit will have its own calculation formula.
Situation 1. Impact of sales volume on profit:
ΔPRvolume = ΔVprod × (Cplan – Sunit plan) = (Vprod. fact – Vprod. plan) × (Cplan – Sunit plan).
Situation 2. Impact of selling price on profit:
ΔPRprice = Vproduct fact × ΔC = Vproduct fact × (Cfact – Cplan).
Situation 3. Impact of unit cost on profit:
ΔPRSed = Vprod. fact × (–ΔSed) = Vprod. fact × (–(Sed. fact – Sed. plan)).
Method of chain substitutions
In this case, the influence of each factor is considered mexico number for whatsapp sequentially, while the others remain unchanged. The basis is the same mathematical formula of the factor analysis model of sales profit.
Method of chain substitutions
Source: shutterstock.com
Let's determine the influence of factors on the amount of profit.
Situation 1. Change in sales volume.
PR1 = Vprod. fact × (Cplan – Sed.plan);
ΔPRvolume = PR1 – PRplan.
Situation 2. Change in selling price.
PR2 = Vprod. fact × (Cfact – Sed. plan);
ΔPRprice = PR2 – PR1.
How to achieve multiple growth in traffic and sales from your website?
Alexey Boyarkin
Dmitry Svistunov
Head of SEO and Development
Read more posts on my personal blog:
I have always been concerned about the issue of moving to a fundamentally new level. So that the indicators would grow not by 2 or 3 times, but by several orders of magnitude. From a thousand visits to ten thousand or from ten thousand to a hundred thousand, if we are talking about a website, for example.
And I know that such leaps are always the result of painstaking work in five areas:
Technical condition of the site.
SEO.
Collection of site semantics.
Creating useful content.
Working on conversion.
And at the same time, every manager needs an increase in sales and the number of applications from the site at the moment.
To get this growth, download our step-by-step template for increasing sales from the site:
Download template
Already downloaded
153116
Situation 3. Change in the cost price of a unit of goods.
PRSed = Vprod. fact × (Cfact – Sed. fact);
ΔPRSed = PR3 – PR2.
The following symbols are used in these formulas:
PRplan - planned profit from sales;
PR1 — profit generated under the influence of the factor of change in sales volume (situation one);
PR2 - profit generated under the influence of the price change factor (situation two);
PR3 - profit generated under the influence of the factor of change in the cost of selling a unit of goods (situation three);
ΔPRvolume is the amount of deviation in profit when the sales volume changes;
ΔPRprice is the amount of deviation in profit when the price changes;
ΔПSed — the amount of deviation in profit when the cost of a unit of goods sold changes;
ΔVprod — the difference between the actual and base sales volume;
ΔЦ — the difference between the actual and base sales cost;
ΔSed — the difference between the actual and base cost of a unit of goods sold;
Vprod. fact — actual sales volume;
Vprod. plan — planned sales volume;
Цплан — planned price;
Cfact - actual price;
Sed. plan — planned cost of one unit of goods sold;
Sed. fact — the actual cost of one unit of goods sold.
Read also!
"Company Marketing Plan: Short and Detailed Versions"
Read more
The results obtained by the chain substitution method coincide with the results obtained by the absolute difference method.
Method of chain substitutions
Source: shutterstock.com
The total deviation of profit is equal to the sum of the deviations arising under the influence of all the factors for which the factor analysis is carried out.