Background Information of the Manager

 Background Information of the Manager

Jean Pinoux promoted to the manager of the French region since 2007. He had started as a sales representative, then advanced to be responsible for production, and finally became division manager.

Jean did a nice job in 2009. The sales had increased almost 20%, and profits were above budget, although the actual average summer temperature was lower than the predicted one (Prediction: 29.8 degree Celsius, Actuality: 29.2 degree Celsius). The main reason why Jean had such success in 2009 was that he spent a lot of time managing the expansion into the west coast of France, negotiating with new vendors and suppliers, and arranging distribution of the product. Although the performance of east coast was not as good as the performance in 2008 and 2007, we can still say that Jean has a great capacity in management.

Jean also found an approach to increase revenue: using refrigerated trucks to deliver products not for the Compagnie du Froid, S.A. to get a fee. The new source of revenue may really work well for the company, but Jacques, CEO and major shareholder, worried that it might influence mission of the company which emphasized the quality of ice cream and service.

 Flexible Budget

Here is the flexible budget of the French region, based on the data in 2009.

We can see from the chart that the 351 euros favorable static-budget variance can be divided into 896 euros favorable sales- activity variance and 545 euros unfavorable flexible-budget variance.

As is shown in the chart, the favorable result of the static-budget variance was thanks to the favorable sales-activity variance. The high volume of sales of ice-cream contributes a lot. Although the cost of ice-cream is unfavorable, the sales volume is high enough to cover the high cost. For the price, we can analyze from the flexible-budget variance