How is total revenue change from budget calculated. I take the actual number with the budget number and add or subtract them together and divide by the budget number? I'm lost can you help please?
Calculating the change in total revenue from the budget involves a few steps. Let's break it down:
Step 1: Find the difference between the actual revenue and the budgeted revenue.
This is done by subtracting the budgeted revenue from the actual revenue. If the actual revenue is greater than the budgeted revenue, the difference will be positive. If the actual revenue is less than the budgeted revenue, the difference will be negative. Let's call this difference "Revenue Difference".
Revenue Difference = Actual Revenue - Budgeted Revenue
Step 2: Calculate the relative change or percentage change in revenue.
To calculate the relative change, divide the Revenue Difference by the budgeted revenue. Then multiply the result by 100 to express it as a percentage.
Relative Change = (Revenue Difference / Budgeted Revenue) * 100
Step 3: Calculate the percentage increase or decrease.
To determine whether the revenue change is positive (increase) or negative (decrease), we look at the sign of the Revenue Difference. If the difference is positive, it means that the actual revenue exceeded the budgeted revenue, indicating an increase. If the difference is negative, it means that the actual revenue fell short of the budgeted revenue, indicating a decrease.
To summarize, here's the formula to calculate the change in total revenue from the budget:
Total Revenue Change = ((Actual Revenue - Budgeted Revenue) / Budgeted Revenue) * 100
Remember that the result can be either positive or negative, indicating an increase or decrease respectively.