Accumulated deviation from Budget (%)
What is it?
Deviation from Budget is the percentage variance between actual result and budgeted costs or income for a given period. It represents either a positive or negative difference and indicates how well the organization has managed to stay within the planned budget for a specific activity, project, or operation.
Cumulative means summing up or accumulating outcomes for different time periods (often months) over a certain period of time; in this case the current year. In other words, it is a cumulative or aggregated statement that shows the outcome so far.
Cumulative outcome is often used to get a more comprehensive picture of the performance development or the outcome over time. It helps analyze the cumulative effect of events and transactions and enables the identification of trends and patterns that can be useful for decision-making and planning.
How is it calculated?
Deviation from Budget = (Result - Budget) / |Budget|
* Includes results and budget for the current year.
Why is it important to follow?
Carefully tracking the deviation from the budget is crucial for ensuring financial stability and efficient resource utilization within the organization. By identifying and analyzing deviations, the organization can understand why costs have deviated from the planned amounts and take action to correct any issues or improve future budgeting and planning. This enables better resource allocation, reduces the risk of financial losses, and contributes to maintaining sound financial governance and management.
Created by Homepal
12/11/2024
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