How To Reconcile Budgeted Operating Statement

Question

Demonstrate how you would monitor performance against budgets within a business.
You will need to:

·    how would you calculate variances, identify possible causes  and recommend corrective action

You will need to briefly describe the types of variances, what might cause them, and recommend action that will eliminate or minimize the variance. For example, if office equipment maintenance costs vary widely from month to month, then appropriate action might include staff usage training, and/or renewal of equipment, and/or a planned preventative  maintenance schedule.

·    how would you prepare an operating statement reconciling budgeted and actual results

The operating statement is simply a reconciliation statement, listing actual income and expenditure against budgeted (forecast) income and expenditure. Select a period of at least one month, ideally for an activity area within your own organization (or a suitable researchable one) and prepare such as statement, adding comments, explanations, where appropriate.

·    explain how you would report findings to management in accordance with identified responsibility centers

Ideally using your own organization (or a suitable researchable one), identify a Responsibility Centre – sometimes known as Cost Centers or Profit Centers, and sometimes not labeled at all but they do exist – check with your line manager or Finance department - and describe it, and prepare a simple report on its current budget performance (if appropriate you can use the findings from the operating statement in the previous criteria).

Summary

The question belongs to Finance and it discusses about calculating variance, identify possible causes and recommending corrective action, preparing an operating statement reconciling budgeted and actual results.

Total Word Count 508