Business XYZ has the following projected budget and actual budget for a given month:
| | Budget | Actual |
| -------- | ----------- | ----------- |
| Payroll | $27,500 | $29,760 |
| Inventory| $13,700 | $14,230 |
| Rent | $9,200 | $9,970 |
| Services | $4,600 | $5,600 |
Calculate the percent change that Payroll is over budget.
$\Delta \%=[?] \%$
Answer (2)
Calculate the difference between the actual and budgeted payroll: $29 , 760 − $27 , 500 = $2 , 260 .
Calculate the percentage change: $27 , 500 $2 , 260 × 100 = 8.218181818 .
Round the percentage change to two decimal places: 8.22% .
The payroll is over budget by 8.22% .
Explanation
Understanding the Problem We are given the budgeted and actual payroll amounts for Business XYZ and asked to calculate the percent change that the payroll is over budget.
Calculating the Difference First, we need to find the difference between the actual payroll and the budgeted payroll. This will tell us how much the payroll exceeded the budget.
Finding the Difference The actual payroll is $29 , 760 and the budgeted payroll is $27 , 500 . The difference is calculated as: D i ff ere n ce = A c t u a l − B u d g e t e d = $29 , 760 − $27 , 500 = $2 , 260
Calculating the Percentage Change Next, we calculate the percentage change using the formula: %Δ = B u d g e t e d D i ff ere n ce × 100
Substituting the Values Substituting the values we have: %Δ = $27 , 500 $2 , 260 × 100
Calculating the Percentage %Δ = 0.08218181818 × 100 = 8.218181818
Final Answer Rounding to two decimal places, the percent change is 8.22% .
Examples
Understanding percentage changes is crucial in personal finance. For instance, if you budget a certain amount for groceries each month, calculating the percentage change between your budgeted amount and actual spending helps you identify areas where you might be overspending. This allows you to make informed decisions about adjusting your spending habits to stay within your financial goals. Similarly, businesses use percentage change calculations to monitor revenue growth, expense control, and overall financial performance, enabling them to make strategic adjustments for profitability.
The Payroll is over budget by approximately 8.22%. This is calculated by finding the difference between the actual payroll and the budgeted payroll, determining the excess of $2,260, and then calculating what percentage that excess represents of the budgeted amount. Understanding these calculations helps businesses manage their finances effectively.
;
