# Budget Analysis

Topics: Pro forma, Revenue, Analysis of variance Pages: 5 (742 words) Published: May 2, 2013
BUDGET MANAGEMENT ANALYSIS

To have a basis in illustrating the analysis of variance or difference between budgeted and actual figures, the budget of a sampled (unknown) company was utilized (http://www.smallbusinessnotes.com/business-finances/budgeting-systems.html).

| | | | | | | | | | | | | | | | | | | | | | | | | |Sample Company | | | | | |Budget | | | | | |January 1, xxxx to December 31, xxxx | | | | | |  |  |  |  | | |Category |Actual |Budget |Difference | | | |Net Sales |385,400 |300,000 |85,400 | | |Cost of Goods | | | | | | | | Merchandise Inventory, January 1 |160,000 |160,000 |0 | | | Less Inventory, December 31 |100,000 |120,000 |-20,000 | | |  Cost of Goods Sold |182,500 |132,000 |50,500 | | |  Gross Profit |202,900 |168,000 |34,900 | | |Interest Income | 500 | 700 | (200) | | |Expenses | | | | | |

Net Income |\$69,210 |\$61,850 |\$7,360 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

VARIANCE ANALYSIS:

1. There was a 28.47% increase in sales.

This would indicate marketing effectiveness.

2. Purchases increased by 33.33%.

Purchases increased by 33.33%, indicating a possibility that the company must have purchased additional raw materials to cope with increased volume of sales...