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 = R28,655 B) Semi-Fixed Expenses = R143,272 C) Departmental Expenses = R171,927 (A + B) D) Department Turnover = R573,088 E) Departmental Expense % = 30% (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 Bodyshop are also know as Direct
Expenses and refer to the total expenses incurred. They represent the
sum total of the Variable Expenses and Semi-Fixed Expenses.