IENG 216IENG 216
VariancesVariances
Budget VariancesBudget VariancesSeptember Year - to Date
Budget Actual Variance Budget Actual VarianceSales $64,200 $67,300 $3,100 $635,580 $605,700 ($29,880)Operating Expenses Salaries 18,000 18,000 0 186,300 194,400 (8,100) Sales Commissions 14,000 14,700 (700) 126,000 119,070 6,930 Travel & Entertainment 5,000 4,400 600 45,000 41,580 3,420 Telephone 3,200 3,700 (500) 34,560 41,625 (7,065) Advertising 5,600 6,900 (1,300) 50,400 52,785 (2,385) Rent 3,500 3,500 0 34,650 28,350 6,300Total $49,300 $51,200 ($1,900) $476,910 $477,810 ($900)
Allocated Expenses Headquarters Sales 1,800 1,800 0 19,440 18,630 810 National Adv. 3,200 3,200 0 27,360 33,120 (5,760) Trade Shows 1,400 1,900 (500) 13,860 15,390 (1,530)Total $6,400 $6,900 ($500) $60,660 $67,140 ($6,480)
September Year - to DateBudget Actual Variance Budget Actual Variance
Sales $64,200 $67,300 $3,100 $635,580 $605,700 ($29,880)Operating Expenses Salaries 18,000 18,000 0 186,300 194,400 (8,100) Sales Commissions 14,000 14,700 (700) 126,000 119,070 6,930 Travel & Entertainment 5,000 4,400 600 45,000 41,580 3,420 Telephone 3,200 3,700 (500) 34,560 41,625 (7,065) Advertising 5,600 6,900 (1,300) 50,400 52,785 (2,385) Rent 3,500 3,500 0 34,650 28,350 6,300Total $49,300 $51,200 ($1,900) $476,910 $477,810 ($900)
Allocated Expenses Headquarters Sales 1,800 1,800 0 19,440 18,630 810 National Adv. 3,200 3,200 0 27,360 33,120 (5,760) Trade Shows 1,400 1,900 (500) 13,860 15,390 (1,530)Total $6,400 $6,900 ($500) $60,660 $67,140 ($6,480)
Positive (favorable) VariancesNegative (unfavorable) Variances
September Year - to DateBudget Actual Variance Budget Actual Variance
Sales $64,200 $67,300 $3,100 $635,580 $605,700 ($29,880)Operating Expenses Salaries 18,000 18,000 0 186,300 194,400 (8,100) Sales Commissions 14,000 14,700 (700) 126,000 119,070 6,930 Travel & Entertainment 5,000 4,400 600 45,000 41,580 3,420 Telephone 3,200 3,700 (500) 34,560 41,625 (7,065) Advertising 5,600 6,900 (1,300) 50,400 52,785 (2,385) Rent 3,500 3,500 0 34,650 28,350 6,300Total $49,300 $51,200 ($1,900) $476,910 $477,810 ($900)
Allocated Expenses Headquarters Sales 1,800 1,800 0 19,440 18,630 810 National Adv. 3,200 3,200 0 27,360 33,120 (5,760) Trade Shows 1,400 1,900 (500) 13,860 15,390 (1,530)Total $6,400 $6,900 ($500) $60,660 $67,140 ($6,480)
Deterministic ExpensesDiscretionary Expenses
September Year - to DateBudget Actual Variance Budget Actual Variance
Sales $64,200 $67,300 $3,100 $635,580 $605,700 ($29,880)Operating Expenses Salaries 18,000 18,000 0 186,300 194,400 (8,100) Sales Commissions 14,000 14,700 (700) 126,000 119,070 6,930 Travel & Entertainment 5,000 4,400 600 45,000 41,580 3,420 Telephone 3,200 3,700 (500) 34,560 41,625 (7,065) Advertising 5,600 6,900 (1,300) 50,400 52,785 (2,385) Rent 3,500 3,500 0 34,650 28,350 6,300Total $49,300 $51,200 ($1,900) $476,910 $477,810 ($900)
Allocated Expenses Headquarters Sales 1,800 1,800 0 19,440 18,630 810 National Adv. 3,200 3,200 0 27,360 33,120 (5,760) Trade Shows 1,400 1,900 (500) 13,860 15,390 (1,530)Total $6,400 $6,900 ($500) $60,660 $67,140 ($6,480)
Materiality of the Variance
September Year - to DateBudget Actual Variance Budget Actual Variance
Sales $64,200 $67,300 $3,100 $635,580 $605,700 ($29,880)Operating Expenses Salaries 18,000 18,000 0 186,300 194,400 (8,100) Sales Commissions 14,000 14,700 (700) 126,000 119,070 6,930 Travel & Entertainment 5,000 4,400 600 45,000 41,580 3,420 Telephone 3,200 3,700 (500) 34,560 41,625 (7,065) Advertising 5,600 6,900 (1,300) 50,400 52,785 (2,385) Rent 3,500 3,500 0 34,650 28,350 6,300Total $49,300 $51,200 ($1,900) $476,910 $477,810 ($900)
Allocated Expenses Headquarters Sales 1,800 1,800 0 19,440 18,630 810 National Adv. 3,200 3,200 0 27,360 33,120 (5,760) Trade Shows 1,400 1,900 (500) 13,860 15,390 (1,530)Total $6,400 $6,900 ($500) $60,660 $67,140 ($6,480)
Timeliness
Date: 12-07-98
ExampleExample
a. Develop a variance report by expenseb. Which expenses are important (Mngmt by exception)?c. Which variances are significant (materiality)?
Klabor Inc. Actual BudgetSalaries $18.3 $18.7Supplies 3.4 3.9Rent & Occupancy 5.4 5.2Consulting 3.4 3.0Training 1.9 1.7Travel 2.5 2.9Telephone 1.1 0.9Computing 1.8 2.3 Total $37.8 $38.6
ExampleExampleKlabor Inc. Actual Budget VarianceSalaries $18.3 $18.7 $0.4Supplies 3.4 3.9 $0.5Rent & Occupancy 5.4 5.2 ($0.2)Consulting 3.4 3.0 ($0.4)Training 1.9 1.7 ($0.2)Travel 2.5 2.9 $0.4Telephone 1.1 0.9 ($0.2)Computing 1.8 2.3 $0.5 Total $37.8 $38.6 $0.8
Recommended
