King Edward VII College: Profit and Loss Variance Report Analysis

This project analyzes the profit and loss variance reports for King Edward VII College, comparing the budget and actual figures for both Sydney and Brisbane campuses over a six-month period ending December 2016. The analysis includes detailed income and expense breakdowns, highlighting significant variances in sales, electricity and gas, internet, office supplies, rent, stationary, wages and salaries, superannuation, travel and accommodation, water, and work cover insurance. The report provides a comprehensive overview of the financial performance of each campus, identifying key areas of concern such as high electricity and gas costs, and suggesting strategies for cost reduction, including exploring renewable energy sources and improving operational efficiency. The analysis also proposes amendments to the original operational plan, considering increased student enrollment and the need for additional equipment and resources to support both staff and students.

Profit and Loss – six months to Dec 16 - Sydney
Budget Actuals
Income: Sales $450,000 $475,000
Electricity and gas $1,500 $3,000
Internet $1,000 $1,100
Office supplies $700 $1,200
Rent $225,000 $220,000
Stationary $800 $1,300
Wages and salaries $115,000 $117,000
Superannuation expense $15,000 $16,000
Travel and accommodation $2,500 $2,700
Water $2,000 $2,600
Work cover insurance $900 $900
814400 840800
Net profit / loss (Actuals –
Budget)
840,800-814,400 $26,400
Income: Sales
Electricity and gas
Internet
Office supplies
Rent
Stationary
Wages and salaries
Superannuation expense
Travel and accommodation
Water
Work cover insurance
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
Budget Vs Actual Costs: Sydney
Budget Actuals
Chart: Budget Vs Actuals - Sydney
Profit and Loss – six months to Dec 16 - Brisbane
Budget Actuals
Income: Sales $350,000 $410,000
Electricity and gas $1,200 $2,800
Internet $1,100 $1,100
Office supplies $650 $1,300
Rent $185,000 $190,000
Stationary $700 $1,250
Wages and salaries $115,000 $117,000
Superannuation expense $15,000 $16,000
Travel and accommodation $2,100 $2,300
Water $1,900 $2,100

Work cover insurance $870 $870
Totals 673520 744720
Net profit / loss (Actuals –
Budget)
$744,720 – 673,520 $71,000
Income: Sales
Electricity and gas
Internet
Office supplies
Rent
Stationary
Wages and salaries
Superannuation expense
Travel and accommodation
Water
Work cover insurance
$0
$200,000
$400,000
$600,000
$800,000
Budget Vs Actuals: Brisbane
Budget Actuals
Chart: Budget Vs Actuals, Brisbane
Variance report for Sydney
Budget Actuals Variance
Income: Sales $450,000 $475,000 106%
Electricity and gas $1,500 $3,000 200%
Internet $1,000 $1,100 110%
Office supplies $700 $1,200 171%
Rent $225,000 $220,000 98%
Stationary $800 $1,300 163%
Wages and salaries $115,000 $117,000 102%
Superannuation expense $15,000 $16,000 107%
Travel and accommodation $2,500 $2,700 108%
Water $2,000 $2,600 130%
Work cover insurance $900 $900 100%
From the above variance report, the cost of electricity and gas was the highest at double the
allocated cost, followed by office supplies at 71% of the allocated cost while stationery was at
63% of the allocated costs. Water is also notable for rising at a third (130%) of the allocated
cost. There was a modest rise in the income of 6% at $475,000 up from $450,000.
On the whole, almost all expenses except rent actually cost higher that the budgeted amounts

Variance Report for Brisbane
Budget Actuals Variance
Income: Sales $350,000 $410,000 117.14%
Electricity and gas $1,200 $2,800 233.33%
Internet $1,100 $1,100 100.00%
Office supplies $650 $1,300 200.00%
Rent $185,000 $190,000 102.70%
Stationary $700 $1,250 178.57%
Wages and salaries $115,000 $117,000 101.74%
Superannuation expense $15,000 $16,000 106.67%
Travel and accommodation $2,100 $2,300 109.52%
Water $1,900 $2,100 110.53%
Work cover insurance $870 $870 100.00%
From the above variance report, electricity and gas in Brisbane was much higher than budgeted
at more than double the budgeted cost (233%). The cost of office supplies doubled at 200%
while stationery increased by 78$. Water here only rose to 10% more than the budgeted
amount. There was an appreciable increase of revenue of 17% at $410,000 up from the
budgeted $350,000
It appears that the cost of electricity and gas, stationery and office supplies is very high when
compared to the budetted costs. Water cost also appears to be higher, particularly in Sydney.
There is therefore need to look for alternative cheaper sources of energy for both campuses to
cut down on electricity and gas costs. Renewable energy should be considered e.g. solar lighting
for classrooms and solar water heating systems for hot water to cut down on electricity and gas
costs.
Stationery costs could be high due to lack of proper use of the same. There is therefore need to
enforce propersue for example, ensuring that printed work is printed on both papers of the
page to save on ink, use of draft quality when printing, etc. water also needs to be used
properly although the college should consider drilling boreholes to reduce water costs.
Variance on the original plan
Since there is an upsurge of students that is higher than expected, the following variances to
the original plan are proposed.
- Recruitment of one academic manager each for the two campuses.
- Amendment of the required equipment to increase the amount of equipment required
for the staff and students to use as follows:
- Original operational plan number - Amended operational plan number
- 8 telephones - 9 telephones
- 10 staff computers - 12 staff computers
- 20 student computers - 25 student computers
- 4 printers - 5 printers
- 2 scanners - 4 scanners
- 4 iPads - 6 iPads
- 10 staff desks and office chairs - 11 staff desks and office chairs
- 50 student desks (2 seaters) - 70 student desks (2 seaters)

- 100 student chairs - 140 student chairs
- 100 pens (with College logo) - 140 pens (with College logo)
- 50 packs A4 paper - 75 packs A4 paper
- 10 staplers - 14 staplers