Page 111 - Budgeting for Managers

An Error Etched in Stone
Even after being a writer and editor for over 20 years, I
still make proofreading mistakes. One time, I needed to veri-
fy the etching for a tombstone. I checked it five times and had my wife
94 Budgeting for Managers
check it as well. Everything looked fine and we approved it.Well, the
name was spelled right. But, unfortunately, the word “niece” was mis-
spelled. I’d written it wrong in the original, but I assumed that the stone
carvers checked the ordinary words, so I’d checked only the names.
Make sure your errors are fixed before they are etched in stone—
or in the annual budget.

A1 B1 A2 B2
Estimated Estimated
with
with
Estimated
Equipment purchase TEAMFLY Estimated Rounding
Rounding

Expenses $200.00 $200.00 $200.0000 $200.0000
Equipment leases
Toner 90.00 90.00 90.0000 90.0000
Plain paper 30.00 30.00 30.0000 30.0000
6.00
6.00
6.0000
6.0000
Special papers 79.17 79.17 79.1667 79.1700
Service contracts 133.33 133.33 133.3333 133.3300
Equipment repair 29.17 29.17 29.1667 29.1700
Miscellaneous 15.00 15.00 15.0000 15.0000
19.95
Sales tax
19.9500
19.9467
19.95
Total Expenses $602.61 $602.62 $602.61 $602.62

Table 6-1. Computer spreadsheet with rounding error
If you check the total, you will find it should be $602.62, not
$602.61. Yet the formula in the “Total expenses” cell of column
A1 is the sum of the correct line items. What went wrong? It is
called a rounding error. The numbers in the spreadsheet are not
exact figures; each line item is rounded to the nearest cent for
display. But, inside the computer file, $79.17 is actually a third
of a cent lower, $79.16666. Several of the cells have this error.
When they are added, the fractions of a cent add up and the
total ends up one cent off. We often get these kinds of errors in
estimates, because we create the numbers by dividing other

Team-Fly
®