Introduction: In this assignment I will be concentrating on the monthly budget of Monsoon, I will be
calculating the items, the expenditure, actual budget and the variance. Based on this I will be able to
tell if the variance is favourable or Adverse. I will complete the table with the information provided
from the assignment paper.
Item Monthly Planned Actual Budget Variance
Expenditure Favourable/Adverse
Bulbs £2000 £1900 £100 favourable
Plastic Bases £1500 £1500 £0
Telescopic arms £3500 £5000 £1500 adverse
Switches £1000 £1070 £70 adverse
Transformers £5000 £3000 £2000 favourable
Cables and plugs £1800 £1750 £50 favourable
Screws £500 £570 £70 adverse
Wages £5000 £4500 £500 favourable
Total £20300 £19290 £1010 favourable
On the table above, we can see the calculations for monthly budget at Monsoon.
As we can see Monsoon’s planned expenditure for bulbs were set to £2000, but in reality the budget
were set to £1900 this means Monsoon is £100 favourable comparing to their monthly planning,
£100 is not much but it shows that there is an no issue either within the planned budget and the
actual budget. This means Monsoon have additional money to plan for the next month budget. For
example, Monsoon may purchase more bulbs and this mean there will be higher budget above
£2000 set for next month. This will help Monsoon to develop and to be a better business overall.
Second items is Plastic Bases, these were set to be £1500 expenditure monthly and the actual
budget meet the criteria, which are exactly the same to those planned. This means the planning
budget was accurate and its breaking even as the actual budget meets the planned budget therefore
Monsoon’s budget is not losing or gaining anything extra. Also it means all the planned items will be
purchased. Monsoon plan for the next month budget expenditure may stay the same, or lower it if
there is a better supplier deal available.
Third item was Telescopic arms, Planned expenditure on this item was set to £3500, but the actual
budget were actually set at £5000, which is means there is negative £1500 on the budget, this means
Monsoon can’t cover the costs. In planning the budget for next month, Monsoon must think about
changing the supplier as the price of Telescopic arm for the current month is to expensive for the
business. Therefore, Monsoon have to do their best to spend less to meet the budget criteria.
Fourth item is Switches, the plan was to spend £1000 from the budget, but actual budget showed
that there is £1070 to spend on switches, this means Monsoon can spend the planned £1000 on the
switches but be left with £70 negative, as the actual budget shows it will have to cost £1070 and not
as planned £1000. This means Monsoon will have to change their budget for the following month as
its adverse in current month. Monsoon may change to cheaper supplier, with a better offer on the
switches and by this save the money. So this time a budget of £1000 will cover it fully, or if the deal is
even better then make the budget even lower.
Fifth item is Transformers, planned monthly expenditure for this item was set to £5000, but in the
actual budget Monsoon spend only £3000, this means planned budget for this item is accurate. The
actual budget spends only £3000 on the transformers and it was planned to spend £5000 this means
calculating the items, the expenditure, actual budget and the variance. Based on this I will be able to
tell if the variance is favourable or Adverse. I will complete the table with the information provided
from the assignment paper.
Item Monthly Planned Actual Budget Variance
Expenditure Favourable/Adverse
Bulbs £2000 £1900 £100 favourable
Plastic Bases £1500 £1500 £0
Telescopic arms £3500 £5000 £1500 adverse
Switches £1000 £1070 £70 adverse
Transformers £5000 £3000 £2000 favourable
Cables and plugs £1800 £1750 £50 favourable
Screws £500 £570 £70 adverse
Wages £5000 £4500 £500 favourable
Total £20300 £19290 £1010 favourable
On the table above, we can see the calculations for monthly budget at Monsoon.
As we can see Monsoon’s planned expenditure for bulbs were set to £2000, but in reality the budget
were set to £1900 this means Monsoon is £100 favourable comparing to their monthly planning,
£100 is not much but it shows that there is an no issue either within the planned budget and the
actual budget. This means Monsoon have additional money to plan for the next month budget. For
example, Monsoon may purchase more bulbs and this mean there will be higher budget above
£2000 set for next month. This will help Monsoon to develop and to be a better business overall.
Second items is Plastic Bases, these were set to be £1500 expenditure monthly and the actual
budget meet the criteria, which are exactly the same to those planned. This means the planning
budget was accurate and its breaking even as the actual budget meets the planned budget therefore
Monsoon’s budget is not losing or gaining anything extra. Also it means all the planned items will be
purchased. Monsoon plan for the next month budget expenditure may stay the same, or lower it if
there is a better supplier deal available.
Third item was Telescopic arms, Planned expenditure on this item was set to £3500, but the actual
budget were actually set at £5000, which is means there is negative £1500 on the budget, this means
Monsoon can’t cover the costs. In planning the budget for next month, Monsoon must think about
changing the supplier as the price of Telescopic arm for the current month is to expensive for the
business. Therefore, Monsoon have to do their best to spend less to meet the budget criteria.
Fourth item is Switches, the plan was to spend £1000 from the budget, but actual budget showed
that there is £1070 to spend on switches, this means Monsoon can spend the planned £1000 on the
switches but be left with £70 negative, as the actual budget shows it will have to cost £1070 and not
as planned £1000. This means Monsoon will have to change their budget for the following month as
its adverse in current month. Monsoon may change to cheaper supplier, with a better offer on the
switches and by this save the money. So this time a budget of £1000 will cover it fully, or if the deal is
even better then make the budget even lower.
Fifth item is Transformers, planned monthly expenditure for this item was set to £5000, but in the
actual budget Monsoon spend only £3000, this means planned budget for this item is accurate. The
actual budget spends only £3000 on the transformers and it was planned to spend £5000 this means
