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Budget Management Analysis & Benchmarking

o Determine specific strategies to manage budgets within forecasts.
o Compare five to seven expense results with budget expectations, and describe possible reasons for variance.
o Recommend three benchmarking techniques and identify those that might improve budget accuracy in future forecasts. Justify your choices.

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Please refer to the attached file for the response.

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).

The following example shows some of the common elements of a Budget.

Sample Company
Budget
January 1, xxxx to December 31, xxxx

Category Actual Budget Difference

Inflows
Net Sales 385,400 300,000 85,400

Cost of Goods
Merchandise Inventory, January 1 160,000 160,000 0
Purchases 120,000 90,000 30,000
Freight Charges 2,500 2,000 500
Total Merchandise Handled 282,500 252,000 30,500

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)
Total Income 202,500 168,700 33,800

Expenses
Salaries 68,250 45,000 23,250
Utilities 5,800 4,500 1,300
Rent 23,000 23,000 0
Office Supplies 2,250 3,000 -750
Insurance 3,900 3,900 0
Advertising 8,650 9,000 -350
Telephone 2,700 2,300 400
Travel and Entertainment 2,550 2,000 550
Dues & Subscriptions 1,100 1,000 100
Interest ...

Solution Summary

Response contains a 7 page Word document with 790 words that includes a budget table and includes benchmarking technique recommendations.

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