The Budget Variation Report - Click to Get Sample Solution

Question: Write a summary onThe budget variation report. Answer: Summary of Key Findings: The budget variation report prepared by calculating the difference between the planned figure and the actual figure can help in planning, tracking as well as controlling overall spending and funding process (Budgeting 2011). The report shows that the budgeted sales figure exceeds the actual sales figure by $200000. Therefore, it can be said that the budget variance for sales is not favorable as the actual sales data is lesser than the initial projected figure. Again, the variance report reveals that the budgeted figure of the gross profit exceeds the actual gross profit figure by $175000 that is by 8%. The end outcome of the gross profit is not as anticipated and therefore reveals an undesirable variance. The unfavorable variance of gross profit therefore calls for the need of the corrective actions (Lalli 2012). Next, the variance report also brings forth the fact that the actual expenses figure exceeds the budgeted figure. Hence it can be hereby be ascertained that the costs incurred for the business operations of the corporation Big Red Bicycle Pty Ltd is higher than the initial expectations indicating adverse spending variance of Big Red Bicycle Pty Ltd. Consequently, the report also reveals that the projected budgeted figure of net profit before interest and tax surpasses the actual figure by $196000 that is by approximately 24%. Subsequently, the actual net profit after tax is also lower than the forecasted figure. Therefore, net profit figure also presents an unfavorable variance as the end result does not meet the expectations owing to the lower than expected sales and adverse spending variances (Shim, Siegel and Shim 2012). In addition to this, the net profit ratio shows that the efficiency of the corporation in converting the income from net sales. The budgeted net profit ratio is 24.7% that is greater than the actual figure of 21.33%. This indicates that the company Big Red Bicycle Pty Ltd lesser efficiency in extracting income from the net sales. Again, the budgeted gross profit ratio is 87.10 and the actual gross profit ratio is 86.90. Therefore it can be ascertained that the profitability of the firm is not as anticipated initially and reveals lesser efficiencies in producing as well as selling the product. Again, the wages and salaries ratio indicates the wages and salaries to the sales ratio. Here budgeted figure for wages and salaries ratio exceeds the actual figure indicating unfavorable condition as it reveals that the spending is greater than sales in actual.