For literature the positive 7000 in february may be

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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. Unfortunately, many 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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