Compagnie du Froid

2650 Words11 Pages
To: Jacques Trumen
From:
Subject: Compagnie du Froid Analysis
Date: November 6, 2014
Memorandum
Campagnie Du Froid is a summer ice-cream business founded in 1985 by the father of Jacques Truman. In 2007, after the passing of his father, Jacques Truman took over the business and emphasized an aggressive growth strategy. By 2009, Campagnie Du Froid was a market leader in the eastern part of France, northeastern coast of Spain, and northern Italy. Each region had its own manager and the main headquarters was located in Paris. Jacques believed decentralizing the decision making as much as possible. Each region had its own manufacturing, marketing, distribution and sales organization. The central office took care of accounting, developing
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The profit side of the causal analysis resulted in a €8 variance attributed to the temperature change and a €50 variance related to performance which resulted in a total volume for profit increase of €58.
The change in prices also had an impact on the Italian region’s expected and actual profit because the €7 total sales variance represented an increase of €7 profit for the actual profit. The €7 variance was calculated by the favorable €20 variance for ice cream sales and an unfavorable variance of €13 for specialty sales (€20-€13=€7). This proves that the Italian region can charge slightly more for their ice cream sales given the increase in demand, while the increase in demand of the specialty product could be more attributed to the decrease in price. Overall, the change in pricing came out to make a positive impact on the Italian region’s profit.
The cost of raw materials impacted the actual profit through the price variance and the quantity variance of the direct materials. Using the level 3 analysis, it was determined that the price variance was favorable €46 and the quantity variance was unfavorable €17 which represented a flexible budget variance of favorable €29. This impacts the profit because the Italian region was very efficient with their costs of direct materials, but the Italian region came up short in their manufacturing efficiencies as they experienced an

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