Actuals to Budget Analysis

by Happy Girl
(London)

I am hoping someone can help me please.

I have been asked to do a comparison spreadsheet between actual revenue and net profit figures against budgeted revenue and profit figures

As an example in September it looked like this:

Budgeted Revenue 200

Actual Revenue 246

Budgeted Profit 160

Actual Profit 188

He has now asked me to increase revenue numbers to plus 70K on the profit target.

What does this mean and what figures am I increasing i.e is it both the budgeted revenue and profit figure?

Thanks

Hi,

You haven't said what your job is or the size of the business you are working for. My guess is you are being asked to do a budget analysis comparing actuals to budget amounts. This usually requires providing explanations as to why actuals varied from budget.

The purpose of doing this type of analysis is to determine if goals and objectives are/have been met, and to monitor operations. For example are let's say sales are down but expenses are up. Action needs to be taken to ensure a cash problem does not arise.


This kind of analysis is usually setup something like this:

Description     Actual     Budget     Variance     Explanation

Revenue          246        200          46            blah blah blah

Expenses

Advertising
Bank Charges
Office Supplies
...

Total Exp.        58         40           18

Net Profit        188       160          28


It is also the time of the year some companies may be finishing off their budgets for the coming year.

If this is case, it is not uncommon to adjust the budget to reflect some event / purpose ... or to run "what if" scenarios.

As revenue and profit are different with changes to revenue affecting profit, I think you need to go back and get clarification on what you are being asked to do.

I've always found a job is easier to do if you ask questions so you know exactly what is required of you to complete your task. It is a lot less stressful to have a clear objective than always trying to second guess .... holding your breath, crossing your fingers, and hoping for the best. :0)

Sorry can't help more without more details. Good luck!