Adjust Variable Budget
This procedure is used to adjust and update variable costs in a combined fixed/variable budget after the resource drivers used or the values in the source budget are updated.
Adjusting the variable budget allows you to see how the variable costs affected the results.
Before you start
- A fixed/variable budget is defined in ‘Division Budget. Create’ (CAS160)
- Resource drivers are defined in ‘Resource Driver. Open’ (CAS040)
Follow these steps
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Start ‘Budget. Create Fixed/Variable’ (CAS160/E).
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Enter the number and version of the budget from where budget values are retrieved, as well as the fixed and variable budgets into which the budget values are to be divided. .
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Select the ‘Adjust variable budget’ check box if you wish to adjust the variable budget according to the period’s activity. Otherwise the percentages defined in ‘Cost Variable. Open’ (CAS040) are applied.
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Enter resource driver unit version and select resource driver unit type.
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End by entering a range of budget periods. Press Enter.
Description
The example shows how a variable budget can be adjusted:
| Total budget | Fixed Cost | Variable Cost | Budgeted # of Activities | Actual # of Activities |
|---|---|---|---|---|
| GBP 10,000 | 60 %(GBP 6,000) | 40 %(GBP 4,000) | 1,000 | 800 |
The variable part of the combined fixed/variable budget is adjusted against the actual outcome. This is done by dividing the actual number of activities with the budgeted number of activities, and then subtracting the budgeted variable cost:
(800/1000) x 4,000 = GBP 3,200
After the budget adjustment, the total budget for the account/cost center is:
6,000 + 3,200 = GBP 9,200
This value is compared to the outcome recorded in the General Ledger.