Profit bridge
- Price -GBP 1,200,000 · Volume GBP 620,000 · Cost -GBP 1,925,000 · Total -GBP 2,505,000.
Executive Intelligence · Executive Financial Performance
Revenue and Cost Driver Analysis
Breaks a change in revenue or cost into drivers (price, volume, mix) with documented arithmetic.
Demonstration: Pinecrest Foods plc (fictional) · Food manufacturing. Fictional data and a scripted answer.
The situation
- Organisation
- Pinecrest Foods plc (fictional)
- Who is asking
- Finance director
- Industry
- Food manufacturing
- What happened
- Profit fell short of budget and three different explanations are circulating: price, volume and cost.
The question asked
How much of the profit change comes from price, from volume and from cost, and what happens if each moves again?
What it reads, and who can see the result
- Budget and actual sales and costs exportBy product group.
- Reads
- Budget and actual totals for price, volume and unit cost.
- Does not read
- Customer-level data.
- Permission
- Finance reporting access.
- Who sees it
- The finance director and the commercial director.
Try it
Change the assumptions. Every result and the answer below are recomputed from them, and a warning appears when a result crosses a stated limit.
- Profit effect of price
- -GBP 1,200,000Budget revenue 80,000,000.
- Profit effect of volume
- GBP 620,000At the budget contribution margin of 31%.
- Profit effect of cost
- -GBP 1,925,000Budget costs 55,000,000.
- Total change in profit
- -GBP 2,505,000
A fall of more than 1,500,000 would put the full-year profit outside the range the board was told to expect.
The answer
Simulated answer. Written for this fictional case, not produced by a live model. Only the figures in it are computed, from what you decided above.
Price contributes -GBP 1,200,000, volume GBP 620,000 and cost -GBP 1,925,000: a total change of -GBP 2,505,000.
Splitting the change shows which of the three explanations carries the weight [S1][S2]. The cost effect is the largest and negative; the price effect is also negative; volume partly offsets them.
A bridge shows contributions; it does not say why each moved. The commercial director should ask whether the price cut bought the volume, which would make the two effects one decision, not two.
Relies on: S1 · Budget and actual, year to dateS2 · Unit cost schedule
No approval is needed for this result: it is read-only insight, and nothing consequential happens because of it.
What it produces
Limits of this example
- A simple three-factor bridge; mix effects are not separated.
- Assumes the budget margins hold for the extra volume.
- This is a scripted demonstration on fictional data. No model was called and no real organisation, person or result is shown.
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