The Kinkead Equipment Company Ltd.

The Kinkead Equimpent Company Ltd.

Template A or Template B?

Variance analysis is used in order to identify differences between budgeted and actual performance of sales and production by taking a view on sales price, variable costs, volumes, fixed costs and at times the sales mix. This is essential to all organizations, and especially those that have their own production facilities.

In the case of The Kinkead Equipment Company Limited (henceforth 'Kinkead'), two templates are used for the variance analysis. Common between both the templates are the calculation of market size, market share, sales price, and variable cost variances for each product. However, the first template (henceforth 'Template A') also analyzes the variances in the sales mix for the company.

Template A is the appropriate form of variance analysis applicable for Kinkead. Kinkead produces goods in two product categories, electric meters and electric instruments. Both serve the same function for the customer, and hence, are substitutes. Sales Mix variances are analyzed when the produced goods are substitutes, thus, template A would be the proper analysis format applicable to Kinkead.

Kinkead and its BCG (Growth/Share) Matrix

The Boston Consultant Group Matrix tries to analyze a company's product portfolio by way of assessing their growth and market share positions. There are four states in the matrix, Stars (high growth, high market share), cash cows (low growth, high market share), question mark (high growth, low market share), and dogs (low growth, low market share)

For Kinkead, they currently have two product lines; electric meters and electric instruments. Electric meters are older technology, are still in regular demand and hold high volumes. Electric instruments are a new experimental technology fulfilling the same purpose as electric meters, but in a more technologically advanced manner.

Electric Meters have been identified as cash cows because they have higher market share ...