Question

Describe in 30 to 50 words (each) what the following budgets/ reports are and how they might be used to inform a team’s operations.

a. Variance analysis.

b. The general ledger.

c. A sales analysis report/ budget report.

d. Variance analysis reports

e. The revenue and expenditure report/ budget.

Answer 1

a. Variance analysis.- Variance analysis is actually trying to measure the difference between planned and actual beahviour. For examaple, you decide to spend $1000 on an appliance but actually end up spending $1500. so the variance analysis gives you the differnce of $500. It can also be used to measure the difference between expected outcome and actual outcome. This analysis help the team to understance the variations that are occuring and also plan what to do about it.

b. The general ledger. - A general ledger provides help to keep record of all the financial transations occuring in the firm. It consists of various accounts such as accounts recievable, accounts payable, cash, invertory, plan and property, ect. It follows the double-entry bookkeeping method. It consists of all the information that is used to prepare financial statements and helps the team for the same.

c. A sales analysis report/ budget report.- Sales analysis reports gives information about recent trends in the sales volume over time. In simple language it helps tells whether the sales are increasing or decreasing. These reports help managers to set the strategy for the firm. For example they observe that sales typically goes low during february. Then to boost it managers can decide to offer some kind of discount to encourage the buyers.

d. Variance analysis reports-  Variance analysis reports consists of the figures for the plan and the actual state of expenditures, profits, sales, ect.It measures the variance for the same. Managers decisions are based on this report. For example, certain profir center reports loss, then the manager can decide to cut cost for the same. Variance can be seen in various areas such as cost of raw material, labour cost, volume of sales, fixed overhead cost ,ect.