Typically, Departmental Expenses are shown as a monetary value and in order for you to capture meaningful trend analysis you will need to express them as a percentage of departmental Turnover.
Example:
A) Variable Expenses = R133,778 B) Semi-Fixed Expenses = R280,326 C) Departmental Expenses = R414,104 (A + B) D) Department Turnover = R7,432,165 E) Vehicles Sold = 784 F) Total Expenses p/unit = R526 (C ÷ E) G) Departmental Expense % = 3.7% (C ÷ D X 100)
Discussion:
Keeping control of Departmental Expenses can be a difficult task unless you fully understand the difference between Variable expenses and Semi-Fixed Expenses.
Variable Expenses are directly linked to sales volume and Semi-Fixed Expenses are not linked to sales volume therefore the actions that you need to take to maintain control is different in each area.
Related Terminology:
The
Departmental Expenses of the Sales Department are also known as Direct
Expenses and refer to the total expenses incurred. They represent the
sum total of the Variable Expenses and Semi-Fixed Expenses.