Prepare an analysis of actual versus budgeted revenues, consultant expenses, and
ID: 2463260 • Letter: P
Question
Prepare an analysis of actual versus budgeted revenues, consultant expenses, and margins using the additional information supplied in Exhibit 4.
Exhibit 4 Line of Business Budget and Actual Operating Statistics: Q2 2000
Contract
Solutions
Total
Actual
Number of consultants (FTE)
64
49
113
Billed hours
24,000
15,000
39,000
Billed revenues
$1,344,000
$1,920,000
$3,264,000
Hours supplied
28,800
22,050
50,850
Consultant costs
$1,036,800
$992,250
$2,029,050
Budget
Number of consultants (FTE)
56
49
105
Billed hours
20,160
15,750
35,910
Billed revenues
$1,088,640
$2,143,260
$3,231,900
Hours supplied
25,200
22,050
47,250
Consultant costs $756,000 $992,250 $1,748,250
Contract
Solutions
Total
Actual
Number of consultants (FTE)
64
49
113
Billed hours
24,000
15,000
39,000
Billed revenues
$1,344,000
$1,920,000
$3,264,000
Hours supplied
28,800
22,050
50,850
Consultant costs
$1,036,800
$992,250
$2,029,050
Budget
Number of consultants (FTE)
56
49
105
Billed hours
20,160
15,750
35,910
Billed revenues
$1,088,640
$2,143,260
$3,231,900
Hours supplied
25,200
22,050
47,250
Consultant costs $756,000 $992,250 $1,748,250
Explanation / Answer
Contracts Solution Total Actual Number of consultants (FTE) F 64 49 113 No.of billed hour per consultant H/F 375 306.1 Billed hours H 24,000 15,000 39,000 Billed revenues R $1,344,000 $1,920,000 $3,264,000 Billed Revenue per hour R/H $56 $128 Hours supplied S 28,800 22,050 50,850 Consultant costs C $1,036,800 $992,250 $2,029,050 Billed Cost per hour C/S $36 $45 Budget Contracts Solution Total Number of consultants (FTE) 56 49 105 No.of billed hour per consultant H/F 360 321.4 Billed hours 20,160 15,750 35,910 Billed revenues $1,088,640 $2,143,260 $3,231,900 Billed Revenue per hour R/H $54 $136 Flexible Budget 24000*54 15000*136 $1,296,000 $2,040,000 Hours supplied S 25,200 22,050 47,250 Consultant costs C $756,000 $992,250 $1,748,250 $756,000 992250 $1,748,250 Billed Cost per hour C/S $30 $45 Flexible Budget for consultant cost 28800*30 22050*45 864000 992250 Budget Actual Flexible Contract Solutions Total Contract Solutions Total Contract Solutions Total No.of billed hour per consultant H/F 360 321 375 306 Billed Revenue per hour R/H $54 $136 $56 $128 $54 $136 Billed Cost per hour C/S $30 $45 $30 $45 $30 $45 Billed revenues B $1,088,640 $2,143,260 $3,231,900 $1,344,000 $1,920,000 $3,264,000 $1,296,000 $2,040,000 $3,336,000 Consultant costs C $756,000 $992,250 $1,748,250 $756,000 992250 $1,748,250 $1,036,800 $992,250 $2,029,050 864000 992250 $1,856,250 Margins M $332,640 $1,151,010 $1,483,650 $307,200 $927,750 $1,234,950 $432,000 $1,047,750 $1,479,750 Profit Margin % M/B*100 30.56 53.70 22.86 48.32 Variance Actual-Budget ($25,440) ($223,260) ($248,700) ($124,800) ($120,000) ($244,800) There is variation in activities of contract as 64 is actual vs 56 budgeted The consultant cost for contract is more per hour than budgeted The consultant cost for Solution is same per hour as was budgeted But the contract revenue per hour was more in actual than budgeted And revenue as per hour for solution is less than budgeted This is for your understanding For actual comarison we must prepare flexible budget taking actual no and multiply it with budgeted cost/revenue