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A Brief idea of Actual Profit and Budgeted Profit Reconciliation
The Management of a company will want to know the reason for a difference between actual profit and budgeted profit. A reconciliation of budgeted and actual profit can be shown by adding the positive production and sales variances and by deducting the negative variances from the budgeted profit.
A company in business manufactures several products, which requires a number of simultaneous actions to be taken care of in different responsibility centers. An Actual Profit and Budgeted Profit Reconciliation Statement is a representation of the overall summary of Variances arising from different Responsibility Centers.
These statements allow the top management to get a better and broader view at the picture which explains the important causes that gave rise to this said difference between the Actual profit and Budgeted Profit.
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