How to Worry About Increased Expenditures.
The article discusses the accounting basis of increased expenditures. The article discusses a situation where, in a business enterprise, a budget of planned expenditures was made before the start of this year, but it appears that many of the actual expenditure figures exceed those of the budget rather substantially. The immediate question is: What are the causes and where in particular are the increases very large? It would be of some help to top management to have at its disposal a tool by which it can "see" the development directly, in the desired degree of detail, even if the picture is one-sided in the sense that it does not take those special circumstances into account which ought to be incorporated when the final verdict is given. Basically, the approach is to take a proportional development of the individual expenditure items as a norm and to formulate measures for the extent to which these items deviate from the proportional development. The approach described in this article is not confined to the analysis of expenditures. It can also be applied to sales by regions and by districts within regions; in fact, to any hierarchy of decompositions of some total into nonnegative parts. The analysis can be further extended to budgets in two dimensions; for example, if one desires to separate wages and salaries from other expenditure categories.
- DOI
- 10.2308/tar-4491988
- Volume
- 44 (1)
- Pages
- 27-37
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref