Page 54 - Budgeting for Managers

The Parts of a Budget
four most important standard accounting reports: the balance
sheet, the income and expense statement, the cash flow state-
ment, and the accounts receivable statement.
Right now, let’s look at two reports you can get from the
accounting department that can be really useful: the expense 37
(or income and expense) statement tracking estimated vs. actu-
al and the accounts receivable report, which will show you how
quickly you are getting paid by your customers.
Tracking Expenses: Estimated vs. Actual
Table 2-6 is an estimated vs. actual budget report for March
2003 based on the budget we created for the print shop in
Chapter 1. The values in the Estimated column are simply one-
twelfth of the annual values you gave to the accounting depart-
ment. The Actual figures are the results accounting tracked for
you when you gave them usage reports, service requests,
receipts, and approved payment on bills. The Variance ($) is
Actual minus Estimated. The Variance (%) is calculated as the
difference (Actual minus Estimated) divided by Estimated. If the
percent is near zero, then what really happened was close to
your estimate. If the variance is above 20% or below minus
20%, then it would be good to look at why there is a difference
between estimated and actual. For example, you bought more
plain paper and more toner than expected. Did you run more
March
Print shop expenses Actual Variance $ Variance %
Estimated
Equipment leases $200.00 200.00 $0.00 0
Toner 90.00 110.00 20.00 22
Plain paper 30.00 50.00 20.00 67
Special papers 6.00 4.00 (2.00) –33
Equipment purchase 79.17 — (79.17) –100
Service contracts 133.33 133.33 0.00 0
Equipment repair 29.17 20.00 (9.17) –31
Miscellaneous 15.00 30.00 15.00 100
Sales tax 19.95 17.12 (2.83) –14
Total Expenses $602.62 $564.45 $(38.17) –6

Table 2-6.Tracking expenses: estimated vs. actual