Page 84 - IMDR MSME BOOK 2021

Managing Finance in Micro, Small & Medium Enterprises
pricing of the product. Majority of them are neutral about
the degree of appropriateness of the pricing policies for
their respective products, whereas the enterprises from
service sector have considered the premium pricing for
their product to be appropriate.

Revenue Analysis
Revenue analysis and cost analysis analyse the inputs
and factors that impact the mix of products and services
companies provide, procurement practices, resource
utilization, sales and marketing efforts, and product and
service delivery. The information gleaned from this
analysis helps owners and managers identify actions to
take to reduce costs and drive additional revenues. When
standards are compared to actual performance
numbers, the difference is what we call a “variance.”
Variance analysis can be summarized as an analysis of
the difference between planned and actual numbers.
Variances are computed for both the price and quantity
of materials, labour, and variable overhead, and also for
xed overhead and sales and are reported to
management for forward planning and remedial action
in accordance with the scenario.It is found that the
majority (81%) of the respondent rm have a reasonably
reliable forecast of revenues for next one year and track
their revenues against forecast and analyze variance
every month. It reects the realization of signicance of
the revenue analysis by the selected MSMEs. The
monthly forecasting of revenues leads to plan overall
business operations efciently. By tracking your revenue
across consistent accounting periods, one can compare
it over time and assess the nancial performance of the
organisation.It is also found that majority (68%) of the
respondent rms conduct variance analysis periodically.
It is evident that variance analysis helps maintain
control over a project's expenses by monitoring planned