From the course: Excel: Management Accounting
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Interpreting a variance bridge chart - Microsoft Excel Tutorial
From the course: Excel: Management Accounting
Interpreting a variance bridge chart
- [Instructor] It's not enough to be able to just build a waterfall chart. We need to be able to interpret one as well. That's exactly what we'll spend the next few minutes learning to do. I'm in the 02_03_Begin_Variances excel file. Now, we've generated a hypothetical waterfall chart based on a set a scenario. In this particular case, the firm starts with gross income of 28.5 billion dollars, in the beginning period. The end with gross income of 36.2 billion, give or take a little bit. What happened between the beginning and the end? The waterfall chart tells us this story. Looking at this chart, we see that the firm put considerable investment into selling greater volume of product. Volume was a major tailwind for the firm. It helped to boost gross margin by 22 billion, 973 million dollars. But, in order to boost that unit volume, the firm had to make concessions on price. Probably to major customers. Not a big surprise in some respect, it's tough to get both price and volume. Those…
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