You have been assigned the task of 1) the variance review of the actual expenses for the previous year  to the budgeted expenses and preparing a variance report for any  variance from the budget of 8% including explanations for the variances  and how those variances should be considered in the upcoming budget and

Solution

The Variance Review and Variance Report for Actual Expenses

Introduction

In financial management, a variance is the difference between budgeted or planned expenses and actual expenses. Variance analysis is a crucial tool as it aids in assessing performance and identifying areas for improvement. This assignment involves conducting a variance review by analyzing the actual expenses for the previous year and comparing them to the budgeted expenses. The purpose of the review is to identify any variances exceeding 8% and prepare a detailed variance report, explaining the reasons behind those variances and how they should be considered in the upcoming budget.

Variance Analysis

Variance analysis is a technique used to compare actual performance with planned performance. It encompasses calculating the difference between the budgeted figures and the actual figures to determine the variances. These variances can be either favorable or unfavorable, indicating overperformance or underperformance, respectively. By analyzing variances, organizations can gain valuable insights into their financial performance and take appropriate actions to mitigate any identified issues.

In this assignment, the first step involves comparing the actual expenses for the previous year to the budgeted expenses to identify any variances exceeding 8%. For example, if the budgeted expenses for a specific category were $100,000 and the actual expenses were $110,000, this would result in a variance of $10,000 or 10%. Any variances with a magnitude greater than 8% would require further investigation and analysis.

Explanations for Variances

Once the variances exceeding 8% have been identified, it is crucial to provide detailed explanations for these variances. These explanations should outline the contributing factors behind the variances and the reasons for the deviation from the budgeted figures. Some common causes of variances include changes in market conditions, fluctuations in prices, unexpected events, or inaccuracies in the budgeting process. It is essential to thoroughly analyze each variance and consider any possible operational, financial, or strategic factors that may have influenced the results.

Considerations for the Upcoming Budget

After identifying and explaining the variances, it is important to determine how these variances should be considered in the upcoming budget. Adjustments to the budget may be necessary to align the planned expenses with the actual performance. For example, if a specific expense category consistently shows favorable variances, it may be appropriate to decrease the budgeted amount for that category in the upcoming budget. Conversely, if an expense category consistently shows unfavorable variances, it may be necessary to increase the budgeted amount for that category in order to accurately reflect the actual expenses.

Conclusion

Conducting a variance review and preparing a detailed variance report is a crucial step in financial management. By analyzing and explaining the variances between actual and budgeted expenses, organizations can gain a comprehensive understanding of their financial performance and effectively plan for the future. Taking into account the reasons behind the variances, adjustments can be made in the upcoming budget to ensure accuracy and alignment with actual expenses.

LET THE EXPERTS DO YOUR HOMEWORK NOW

DO MY ASSIGNMENT NOW

Do you have a similar question? Our professional writers have done a similar paper in past.
Give Us your instructions and wait for a professional assignment!

Get a plagiarism-free order today

we guarantee confidentiality and a professional paper and we will meet the deadline.

How it works

Paste your instructions in the instructions box. You can also attach an instructions file

Select the writer category, deadline, and education level and review the instructions

Make a payment for the order to be assigned to a writer

Download the paper after the writer uploads it

Will the writer plagiarize my essay?
You will get a plagiarism-free paper and you can get an originality report upon request.

Is this service safe?
All personal information is confidential and we have 100% safe payment methods. We also guarantee good grades

Order Now