Budget versus actual
Explain the gap between budget and actual operating profit for a fictional business.
- Calculate budget and actual operating profit.
- Build a variance bridge, treating higher costs as adverse.
- Write a 150-word note with two questions for the business.
Show worked check
Budget operating profit is £30,000. Actual operating profit is £20,500. The adverse variance is £9,500: revenue −£6,000, cost of sales −£3,000, staff −£2,000 and other operating costs +£1,500. Do not infer causes from totals alone. Ask about volume, pricing, mix and one-off costs.
