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Module 1: Orçamentação

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As vendas anuais-Fun Run Enterprises

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Accounting - Annual sales - Fun Run Enterprises

Annual sales - Fun Run Enterprises

Annual sales Fund Run Enterprises

Using variance analysis [1] to assist in the understanding of accounting
information.

A variance report is used to show the difference between budgeted and
actual figures. In doing so this may reflect on the performance of the
firm.

The variance report may be used for the cash budget, Profit and Loss
statement and balance sheet.

Management may seek to explain the reasons for the difference between the
budgeted and actual report. There may be valid reasons for the differences
that serve to excuse the person responsible for that particular area. These
reasons should be offered.

You should firstly indicate whether the actual figures are favourable or
unfavourable when compared with the budgeted figures. A favourable result
is when the result is better than expected by management. For instance, if
cash sales are $40 000 in actual amount when they were expected to be only
$35 000.

It would be an unfavourable result if an expense is actually $2000 more
than budgeted for.

This does create some problems in reality. For instance, if the expense
above was sales commission the business concerned may be quite happy if
this expense was $2000 above budget as it may indicate that sales were also
above budget.

Budget variances may be linked to the responsibility given to a person or
department and their performance compared with this budget.

It may also be a means of control. For instance, the budget may include
expenses and the business may be using the budget to set spending limits on
those expenses.

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Links:
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[1] http://alison.com/#