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Unformatted text preview: Loss illustration, at
right, shows a portion of the
proﬁt and loss for the sample
company, as it stood in the
original plan. This table shows the gross margin and sales and marketing expense area
of the original plan. This is a portion of the full table. Actual Results for
Proﬁt and Loss ACTUAL PROFIT AND LOSS RESULTS The next illustration, at right,
shows the actual results
recorded in that portion
of proﬁt and loss, after the
end of March. The actual
results mean little without
comparison to the original
budget illustration, above.
businesses also forget to
compare the original plan to
the actual results. Especially if
business is going well — the
operation shows a proﬁt,
and cash ﬂow is satisfactory
— comparisons with the
original budget are made
poorly or not at all. The illustration shows actual results on the actual worksheet. Note how
actual sales, costs, and expenses are different from planned results. This is
a portion of the full table. 20.6 HURDLE: THE BOOK ON BUSINESS PLANNING Plan vs. Actual Proﬁt and Loss
The following illustration, Plan vs. Actual Proﬁt and Loss, shows the variance in expenses. The actual
results are subtracted from the budget numbers, leaving negative numbers when the actual spending
was more than budget or when the sales or proﬁts were less than budget. Variances are calculated
differently in different portions of the plan.
• In expense rows, variance becomes the planned amount minus the actual amount. Lower expenses are a positive variance. • In the proﬁts and sales areas, variance becomes actual amount minus planned amount. In these
cases, higher sales are a positive variance. PLAN VS. ACTUAL PROFIT AND LOSS The illustration shows a portion of the Proﬁt and Loss Variance. March results showed sales below plan
and costs also below plan, for a negative variance in Sales and a positive variance in Cost of Goods Sold.
The result is a smaller negative variance in Gross Margin. This is a portion of the table. Understanding Varian...
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- Winter '09