Using your company's annual budget,draft a variance report and highlight the budget, actual and variance in different colours.finally express whether the variance was favourable or unfavorable

Answer 1

Certainly! To create a clear and concise variance report, I will provide a fictional example with a table summarizing the budgeted amounts, actual amounts, and the variance expressed in both numerical and percentage terms. I will also indicate whether each variance is favorable or unfavorable. For visual representation, I'll describe which colors could be used for highlighting.

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# Annual Budget Variance Report

## Summary Report for FY 2022

| Category | Budget (USD) | Actual (USD) | Variance (USD) | Variance (%) | Favorable/Unfavorable |
|------------------|--------------|--------------|----------------|--------------|-----------------------|
| Revenue | 1,000,000 | 1,200,000 | 200,000 | 20% | Favorable |
| Cost of Goods Sold | 500,000 | 600,000 | 100,000 | 20% | Unfavorable |
| Gross Profit | 500,000 | 600,000 | 100,000 | 20% | Favorable |
| Operating Expenses | 300,000 | 290,000 | -10,000 | -3.33% | Favorable |
| Net Income | 200,000 | 310,000 | 110,000 | 55% | Favorable |

### Color Codes for Highlighting:
- **Budget (USD):** Black
- **Actual (USD):** Blue
- **Variance (USD):** Green for favorable, Red for unfavorable
- **Variance (%):** Same color as Variance (USD) for consistency
- **Favorable/Unfavorable:** Green for favorable, Red for unfavorable

### Detailed Analysis:

1. **Revenue:**
- **Budget:** $1,000,000
- **Actual:** $1,200,000
- **Variance:** $200,000 (20% Favorable)
- **Interpretation:** The revenue exceeded expectations, which is favorable.

2. **Cost of Goods Sold (COGS):**
- **Budget:** $500,000
- **Actual:** $600,000
- **Variance:** $100,000 (20% Unfavorable)
- **Interpretation:** The COGS exceeded the budget, which is unfavorable, impacting the gross profit margin negatively.

3. **Gross Profit:**
- **Budget:** $500,000
- **Actual:** $600,000
- **Variance:** $100,000 (20% Favorable)
- **Interpretation:** Despite higher COGS, increased revenue resulted in higher gross profit, which is favorable.

4. **Operating Expenses:**
- **Budget:** $300,000
- **Actual:** $290,000
- **Variance:** -$10,000 (-3.33% Favorable)
- **Interpretation:** Operating expenses were under budget, which is favorable.

5. **Net Income:**
- **Budget:** $200,000
- **Actual:** $310,000
- **Variance:** $110,000 (55% Favorable)
- **Interpretation:** Overall, the net income was significantly higher than budgeted, which is favorable, showing efficient management and higher profitability.

### Conclusion:

Overall, the variance analysis indicates predominantly favorable outcomes, with the exception of the Cost of Goods Sold which requires further investigation. The favorable variances in revenue, gross profit, operating expenses, and net income paint a positive picture of the company's financial performance for the year.

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For your actual variance report, replace the fictional numbers with your company's real budget and actual financial data, and use the specified color codes to visually differentiate the columns and highlight the variances for easy readability.