The Portable MBA in Finance and Accounting, 3rd Edition

Measuring Productivity 205

With that Jane started to prepare Exhibit 7.2. First, to prepare Panel A
she compared the actual results with the original budget, the static budget. She
derived the percentage change by dividing the actual by the budget, subtract-
ing one from the result, and multiplying the remainder by 100. For instance, in
the case of revenue:

She did similar computations for the other lines and other panels.

Step 1.

Step 2.

Step 3.

13 800

12 000

115

115 1 015

0 15 100 15

,

,

.

..

.%

=

−=

×=

EXHIBIT 7.2 Comparing the budgets.

Panel A

Actual versus Static Budget

Static Percentage

Budget Actual Indixes Change

Revenue $12,000 $13,800 1.15 15

Variable costs 7,000 7,500 1.07 7

Contribution $ 5,000 $ 6,300 1.26 26

Fixed costs 4,000 4,680 1.17 17

Net income $ 1,000 $ 1,620 1.62 62

Panel B

Actual versus Flexible Budget

Flexible Percentage

Budget Actual Indixes Change

Revenue $14,400 $13,800 0.96 (4)

Variable costs 8,400 7,500 0.89 (11)

Contribution $ 6,000 $ 6,300 1.05 5

Fixed costs 4,000 4,680 1.17 17

Net income $ 2,000 $ 1,620 0.81 (19)

Panel C

Static versus Flexible Budget

Static Flexible Percentage

Budget Budget Indixes Change

Revenue $12,000 $14,400 1.20 20

Variable costs 7,000 8,400 1.20 20

Contribution $ 5,000 $ 6,000 1.20 20

Fixed costs 4,000 4,000 1.00 0

Net income $ 1,000 $ 2,000 2.00 100