Week 3 Day 4 Action Items

Day 4

• [ ] Review a sample variance analysis report.
• [ ] Identify areas where your actual financial performance differs from your budget.

Sample Variance Analysis Report

Summary:

1. Revenue Variance:

   • Actual Revenue: $130,000
   • Budgeted Revenue: $132,000
   • Variance: $2,000

   Explanation: The actual revenue fell slightly short of the budgeted target by $2,000, mainly due to lower-than-expected sales in [specific product/service] during the period.

2. Cost of Goods Sold (COGS) Variance:

   • Actual COGS: $45,000
   • Budgeted COGS: $40,000
   • Variance: $5,000

   Explanation: Higher raw material costs led to a variance of $5,000 in COGS, primarily driven by unexpected price increases from suppliers.

3. Operating Expenses Variance:

   • Actual Expenses: $20,000
   • Budgeted Expenses: $18,200
   • Variance: $1,800

   Explanation: Increased marketing spending for a new campaign accounted for the majority of the $1,800 variance in operating expenses.

   (A financial professional can provide suggested corrective actions and recommendations.)

   Take Action

   Review your budget and compare it to the actuals for the month.

   What areas are different than your original plan?

   Identify why they are different and brainstorm ideas on corrective actions if needed.

   (We will focus on tracking these expenses in more detail next week.)

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