Financial Statement: Budget Analysis and Variances

Calculating monthly or annual budget variances helps to determine differences between budgeted figures and actual figures. This, in turn, serves as a reference point for future budget development and financial decision making.

The following table represents the actual numbers to be used for the current month's analysis. All other costs are equal to their budgeted percentages of total sales.

Actual Sales	$53,000
Food Cost	$19,985
Wages Expense	$16,260
Rent	$1,850
Administrative Expenses	$2,500
Utilities	$2,925
Repairs and Maintenance	$1,545

In a Microsoft Word document, analyze and explain whether the variances you calculated are favorable or unfavorable for The Green Restaurant. Also analyze the possible causes of the calculated variances and describe possible solutions to these variances.

In your analysis document, analyze the impact these variances have on net income and next year's budget development