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In addition, the flexible budgeting process provides you with a quantitative plan that projects revenues and costs for varying levels of activity. It helps you project and evaluate performance because it compares actual revenue and expenses with budgeted data, based on actual volumes. The flex budget also improves your 30-, 60- and 90-day forecasts by accurately reflecting the impact of volume or rate revisions.
For reference purposes, LMS Budgeting stores Budgeting stores several versions of actuals, budgets, and forecasts. These references allow you to compare results over time, look at trends, and examine changes in performance to understand why variances have occurred.
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Your comparison table might look something like this:
KBI | Original | EOY Forecast | Actual | Flex |
|---|---|---|---|---|
Rooms Sold | 1,000 | | 1,100 | | 1,050 | | 1,050 | |
Room Revenue | $10,000 | | $11,000 | | $10,500 | | $10,500 | |
Room Expenses | $3,000 | 30% | $3,300 | 30% | $3,281 | 32% | $3,150 | 30% |
- In September, you said you were going to spend $3,000 and have $10,000 in revenue. (Original).
- At the beginning of the month you changed your forecast to say that you would spend $3,300 and have $11,000 in revenue. (EOY Forecast).
- You actually spent $3,281 and had $10,500 in revenue. (Actual).
- When you apply 30% of what you budgeted for actual room revenue, it reveals that you spent $3,150 on $10,500 revenue (Flex).
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