Reference no: EM132419129 , Length: word count:-350
Purpose of Assignment
The purpose of this assignment is to allow students to gain the necessary knowledge to effectively budget and to minimize the cumulative error between the projected values and actual values.
Note: The official term Income Statement is also known informally as Profit and Loss Statement.
Assignment Steps
Question 1) Using your researched company from week one, construct an income statement from that company's current, given numbers (the actual column). Please have a revenue line and at least 5 expense line items -- below is a simplified example:
Bogus Company Income Statement ending Dec 31, 2017
- Actual Budget Variance
- Revenues
- Expenses
- Cost of Goods Sold
- Salaries
- Office Supplies
- Utilities
- Travel
- Depreciation
- Total Expenses
- Net Income
Question 2) then fill in budget numbers for each line item. I know that you do not have these items in your researched company so go ahead and create these numbers (for analysis purposes) -- be sure to create with at least a 10% difference in each line item -- some higher and some lower.
Question 3) then calculate the variance column (actual - budget) this will be an over or under budget number.
Question 4) then, create a 350-word paper analyzing and explaining the possible reasons each line item was over or under budget and what steps could be taken to rectify this for the next year. This is what should be happening in a real-world company -- except most mid to larger companies do this on a monthly basis -- it is known in some circles as a variance analysis.