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Posted on Jul 12, 2024

You are the new real estate manager for Finance Towers and have been handed the previous year's budget variance report shown below. Review the report;

You are the new real estate manager for Finance Towers and have been handed the previous year's budget variance report shown below. Review the report; then answer the questions that follow. (2) Actual Budget Variance % Change (3) + (1) x100 INCOME 3.8 $2,496,000 72.000 2.424,000 36.000 2.460.000 $2.592.000 36,000 2,556,000 12.000 2.568,000 96,000 -36,000 132.000 -24.000 108,000 -50.0 5.4 -66.7 4.4 21.0 450 205 81.520 73 310.513 19.4 372.000 76,000 260,000 112,000 64.000 32,000 72,000 1. Gross Potential Rental Income 2. Vacancy & Collection Loss 3. Net Rent Revenue 4. Total Miscellaneous Income 5. Effective Gross Income EXPENSES 6. Payroll & Management 7. Decorating 8. Maintenance 9. Supplies 10. Trash Removal 11. Electricity 12. Gas 3. Water & Sewer 14. Management Fee 15. Miscellaneous 16. Administrative 17. Insurance 18. Property Taxes 19. TOTAL OPERATING EXPENSES 20. NOI 21. Annual Debt Service 22. Capital Expenses -1.5 78,205 5,520 50,513 -1.672 2.774 -6.450 8,888 110,328 66,774 25.550 43 -20.2 12.3 80.888 120,000 136,200 36.000 32.000 20,000 16.200 4,000 -1,582 -484 13.5 12,5 -7.9 18,418 -0.4 116.000 104,000 188,000 115,536 124,305 20.305 19.5 222.900 34.900 18.6 1,568,000 1.779,137 211,137 13.5 892.000 - 103,137 -11.6 788,863 460,000 460,000 0 0 0 0 0 0 432.000 23. BEFORE-TAX CASH FLOW 328 883 - 103,137 -239 1. What are the most significant variances? 2. What factors may have caused these variances? 3. What steps might you take to verify whether the variance was an operational shortcoming, or the result of a poor budgeting process? 4. What would you do to correct your variances? 5. How will you explain the budget projections for next year? You are the new real estate manager for Finance Towers and have been handed the previous year's budget variance report shown below. Review the report; then answer the questions that follow. (2) Actual Budget Variance % Change (3) + (1) x100 INCOME 3.8 $2,496,000 72.000 2.424,000 36.000 2.460.000 $2.592.000 36,000 2,556,000 12.000 2.568,000 96,000 -36,000 132.000 -24.000 108,000 -50.0 5.4 -66.7 4.4 21.0 450 205 81.520 73 310.513 19.4 372.000 76,000 260,000 112,000 64.000 32,000 72,000 1. Gross Potential Rental Income 2. Vacancy & Collection Loss 3. Net Rent Revenue 4. Total Miscellaneous Income 5. Effective Gross Income EXPENSES 6. Payroll & Management 7. Decorating 8. Maintenance 9. Supplies 10. Trash Removal 11. Electricity 12. Gas 3. Water & Sewer 14. Management Fee 15. Miscellaneous 16. Administrative 17. Insurance 18. Property Taxes 19. TOTAL OPERATING EXPENSES 20. NOI 21. Annual Debt Service 22. Capital Expenses -1.5 78,205 5,520 50,513 -1.672 2.774 -6.450 8,888 110,328 66,774 25.550 43 -20.2 12.3 80.888 120,000 136,200 36.000 32.000 20,000 16.200 4,000 -1,582 -484 13.5 12,5 -7.9 18,418 -0.4 116.000 104,000 188,000 115,536 124,305 20.305 19.5 222.900 34.900 18.6 1,568,000 1.779,137 211,137 13.5 892.000 - 103,137 -11.6 788,863 460,000 460,000 0 0 0 0 0 0 432.000 23. BEFORE-TAX CASH FLOW 328 883 - 103,137 -239 1. What are the most significant variances? 2. What factors may have caused these variances? 3. What steps might you take to verify whether the variance was an operational shortcoming, or the result of a poor budgeting process? 4. What would you do to correct your variances? 5. How will you explain the budget projections for next year