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Activity-Based Budget Spreadsheet Solution

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Description of the Activity-Based Budget Model


Activity-based costing derives budgets from the levels of activities that drive expenses. The method provides more
accurate and defensible budgets. Each cost center can have numerous expense accounts, and spending for each
expense account can be driven by numerous activities. (Example: the number of sales orders and order line items drives
expenses in the order processing unit.)
The model computes expense budgets from data for cost-per-activity count and budgeted activity counts.
You specify these essential inputs to model:
A list of expense accounts, optionally assigned to cost centers
Examples of cost centers: order processing, credit and collections, general accounting
Examples of expense accounts: admin labor (order processing), admin labor (receivables), IT expense,
overhead
A list of activities whose levels drive expenses
Examples of activity drivers: number of orders, number of order line items, volume of receivables
The time range that is to be budgeted
Budgeted cost-per-activity count for the budget time range.

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You can optionally specify the following information.


Historical data for comparison with budget
The time range for historical expense data
Actual expenses for each expense account for the historical time range
Actual activity levels for the activity drivers of expense, for the historical time range
Brreakout of fixed and variable expenses, by expense account.
(Activity budgets determine only variable expense budgets.)
Enter actual activity counts and expenses and compute variances from budget.

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This Excel workbook was generated by ModelSheet on December 25, 2009, except for this worksheet of comments.
Copyright 2009 ModelSheet Software, LLC
ModelSheet and the ModelSheet logo are registered trademarks of ModelSheet Software, LLC.

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Activity-Based Budget
Organization: ABC, Inc.
Inputs
Shaded cells are input cells. You can enter data in them.
Formulas in shaded cells are starting suggestions. You can overwrite them.
Organization Name

ABC, Inc.

Expense Data
Activity Data
Activity Drivers of Expense Accounts

History Time Range

1/1/2010 - 6/30/2010

Budget Time Range

7/1/2010 - 12/31/2010

Activity-Based Budget
Organization: ABC, Inc.
History
History Time Range

1/1/2010 - 6/30/2010

Summary by Cost Center


Total Expense
Jan 2010

Feb 2010

Mar 2010

Apr 2010

May 2010

Jun 2010

2010

Total

Expense History
Cost Center A

$0

$0

$0

$0

$0

$0

$0

$0

Cost Center B

$0

$0

$0

$0

$0

$0

$0

$0

Total

$0

$0

$0

$0

$0

$0

$0

$0

Variable Expense
Fixed Expense

Detailed Budget by Expense Account


Total Expense
Variable Expense
Fixed Expense

Activity Counts

Activity-Based Budget
Organization: ABC, Inc.
Activity Costs
Expense Budget by Activity
Expense Budget by Activity and Cost Center
Expense Budget by Activity and Time
Expense Budget by Activity, Detail

Budgeted Activity Counts


Expense/Activity Coefficients

Activity-Based Budget
Organization: ABC, Inc.
Budget
History Time Range

1/1/2010 - 6/30/2010

Budget Time Range

7/1/2010 - 12/31/2010

Summary by Cost Center


Total Expense
Expense History

Expense Budget

Cost Center A

$0

Cost Center A

$0

Cost Center B

$0

Cost Center B

$0

Total

$0

Total

$0

Variable Expense
Fixed Expense

Detail by Expense Account


Total Expense
Variable Expense
Fixed Expense

Activity Counts

Activity-Based Budget
Organization: ABC, Inc.
Budget by Time
History Time Range

1/1/2010 - 6/30/2010

Budget Time Range

7/1/2010 - 12/31/2010

Summary by Cost Center


Total Expense
Jul 2010
Expense History

Aug 2010

Sep 2010

Oct 2010

Nov 2010

Dec 2010

2010

Total

Expense Budget

Cost Center A

$0

Cost Center A

$0

$0

$0

$0

$0

$0

$0

$0

Cost Center B

$0

Cost Center B

$0

$0

$0

$0

$0

$0

$0

$0

Total

$0

Total

$0

$0

$0

$0

$0

$0

$0

$0

Variable Expense
Fixed Expense

Detail by Expense Account


Total Expense
Variable Expense
Fixed Expense

Activity Counts

Activity-Based Budget
Organization: ABC, Inc.
Actual vs Budget
Budget Time Range

7/1/2010 - 12/31/2010

Summary by Cost Center


Expense Budget
Jul 2010

Aug 2010

Sep 2010

Oct 2010

Nov 2010

Dec 2010

2010

Total

Expense Budget
Cost Center A

$0

$0

$0

$0

$0

$0

$0

$0

Cost Center B

$0

$0

$0

$0

$0

$0

$0

$0

Total

$0

$0

$0

$0

$0

$0

$0

$0

Actual Expense
Expense Variance

Detail by Expense Account


Expense Budget
Actual Expense
Expense Variance

Activity Counts

Activity-Based Budget
Organization: ABC, Inc.
Cost Center 1 Cost Center A
History Time Range

1/1/2010 - 6/30/2010

Budget Time Range

7/1/2010 - 12/31/2010

Total Expense
Jul 2010
Expense History

Aug 2010

Sep 2010

Oct 2010

Nov 2010

Dec 2010

2010

Total

Expense Budget

Labor

$0

Labor

$0

$0

$0

$0

$0

$0

$0

$0

Overhead

$0

Overhead

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal

$0

Subtotal

$0

$0

$0

$0

$0

$0

$0

$0

Variable Expense
Fixed Expense

Variable Expense Budget by Activity, Expense Type and Time


Actual Expenses and Variance from Budget

Activity-Based Budget
Organization: ABC, Inc.
Cost Center 2 Cost Center B
History Time Range

1/1/2010 - 6/30/2010

Budget Time Range

7/1/2010 - 12/31/2010

Total Expense
Jul 2010
Expense History

Aug 2010

Sep 2010

Oct 2010

Nov 2010

Dec 2010

2010

Total

Expense Budget

Labor

$0

Labor

$0

$0

$0

$0

$0

$0

$0

$0

Material

$0

Material

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal

$0

Subtotal

$0

$0

$0

$0

$0

$0

$0

$0

Variable Expense
Fixed Expense

Variable Expense Budget by Activity, Expense Type and Time


Actual Expenses and Variance from Budget

Activity-Based Budget
Organization: ABC, Inc.
Formulas
Variable

Display As

Dimension Index

Activities_Dim

Activities_Dim

Activities

Data: Diminfo("Activities")

Activity_Actual_Time

Actual Activity Count

Activity_Budget

Activity Budget

Activity_Budget_Growth_pct_Period

Acitivity Budget Growth%/Period

Activities

Data: (1+Activity_Budget_Growth_pct_Yr)^(1/periods_per("year"))-1

Activity_Budget_Growth_pct_Yr

Activity Budget Growth (%/Yr)

Activity_Budget_Time

Activity Budget

Activities

Data: Activity_Budget_Time_In

Activity_Budget_Time_In

Activity Budget

Activities

Data: preve(Activity_Budget*if(Activity_Budget_Growth_pct_Yr=0, 1/Last(Time_Budget)/periods_per("year"), Activity_Budget_Growth_pct_Period/((1+Activity_Budget_Growth_pct_Yr)^Last(Time_Budget)-1))/(1+Activity_Budget_Growth_pct_Period))*(1+Activity_Budget_Growth_pct_Period)

Activity_Description

Activity Description (text)

Activity_History

Activity History

Activity_History_tsum

Activity History

Activities

Activity_Variance_pct_Time

Activity Variance %

Activities

Roll-up: Activity_Variance_Time/Activity_Budget_Time

Activity_Variance_Time

Variance - Activity Count

Activities

Data: Activity_Actual_Time-Activity_Budget_Time

Driver_Num

Driver Num

Driver_Counters

Data: prevde(0, "Driver_Counters")+1

Expense_Actual_Time

Actual Expense

Expense_Budget

Expense Budget

Expense_Accts

Data: Expense_Fixed_Budget+ExpVar_Budget

Expense_Budget_Time

Expense Budget

Expense_Accts

Data: ExpVar_Budget_Time+Expense_Fixed_Budget_Time

Expense_Fixed_Budget

Fixed Expense Budget

Expense_Accts

Data: Expense_Fixed_Budget_Time

Expense_Fixed_Budget_Time

Fixed Expense Budget

Expense_Accts

Data: Expense_Fixed_Time

Expense_Fixed_History

Fixed Expense History

Expense_Accts

Data: Expense_Fixed_Time

Expense_Fixed_History_tsum

Fixed Expense History

Expense_Accts

Data: Expense_Fixed_History

Expense_Fixed_Time

Fixed Expense

Expense_Accts

Data: preve(0)

Expense_History

Expense History

Expense_Accts

Data: preve(0)

Expense_History_tsum

Expense History

Expense_Accts

Expense_Variance_pct_Time

Expense Variance %

Expense_Accts

Roll-up: Expense_Variance_Time/Expense_Budget_Time

Expense_Variance_Time

Variance - Expense

Expense_Accts

Data: Expense_Actual_Time-Expense_Budget_Time

ExpVar_Budget

Variable Expense Budget

Expense_Accts

Data: ExpVar_Budget_Drivers_Time

ExpVar_Budget_Activities

Var Expense Budget by Activity

Expense_Accts, Activities

Data: ExpVar_Budget_Activities_Time

ExpVar_Budget_Activities_Time

Var Expense Budget by Activity

Expense_Accts, Activities

Data: if(iserror(match(diminfo("Activities"), ranged("Driver_Counters", ExpVar_Drivers), 0)), 0, index(ranged("Driver_Counters", ExpVar_Budget_Drivers_Time), match(diminfo("Activities"), ranged("Driver_Counters", ExpVar_Drivers), 0)))

ExpVar_Budget_Drivers_Time

Variable Expense Budget

Driver_Counters, Expense_Accts

Data: if(iserror(match(ExpVar_Drivers, ranged("Activities", Activities_Dim), 0)), 0, ExpVar_Driver_Coef_Num*index(ranged("Activities", Activity_Budget_Time), match(ExpVar_Drivers, ranged("Activities", Activities_Dim), 0)))

ExpVar_Budget_Time

Variable Expense Budget

Expense_Accts

Data: ExpVar_Budget_Drivers_Time

ExpVar_Driver_Coef

Budget Expense / Activity Count

Driver_Counters, Expense_Accts

Data: ExpVar_Driver_Ratio_Hist

ExpVar_Driver_Coef_Num

Coefficient

Driver_Counters, Expense_Accts

Data: if(isnumber(ExpVar_Driver_Coef), ExpVar_Driver_Coef, 0)

ExpVar_Driver_Ratio_Hist

Historical Expense / Activity Count

Driver_Counters, Expense_Accts

Data: if(ExpVar_Drivers=" ", " ", if(iserror(match(ExpVar_Drivers, ranged("Activities", Activities_Dim), 0)), " ", ExpVar_History*ExpVar_Driver_Wgts_Normed/index(ranged("Activities", Activity_History_tsum), match(ExpVar_Drivers, ranged("Activities", Activities_Dim), 0))))

ExpVar_Driver_Wgts_In

Driver Weights Input

ExpVar_Driver_Wgts_Normed

Normalized Driver Weights

Expense_Accts, Driver_Counters

Formula / Data

Data: Activity_History

Data: Expense_History

Data: if(ExpVar_Drivers_Count=0, 0, if(ExpVar_Driver_Wgts_In=0, 1/ExpVar_Drivers_Count["Driver_Counters"], if(ExpVar_Driver_Wgts_In["Driver_Counters"]=0, 0, ExpVar_Driver_Wgts_In/ExpVar_Driver_Wgts_In["Driver_Counters"])))


Roll-up: ifm(isleafd("Expense_Accts"), sum(ranged("Driver_Counters", ExpVar_Driver_Wgts_Normed)), " ")

ExpVar_Drivers

Activity Drivers

ExpVar_Drivers_Count

Count of Variable Expense Drivers

Expense_Accts, Driver_Counters

Data: if(ExpVar_Drivers=" ", 0, 1)

ExpVar_History

Variable Expense History

Expense_Accts

Data: Expense_History-Expense_Fixed_History

ExpVar_History_tsum

Variable Expense History

Expense_Accts

Data: ExpVar_History

Organization_Name

Organization Name

Time_Budget

Time Budget

Global

Data: preve(0)+1/periods_per("year")

Time_Dates_Budget

Time Dates Budget

Global

Data: current_date()

Time_Dates_History

Time Dates History

Global

Data: current_date()

Time_Range_Budget

Budget Time Range

Global

Data: first(Time_Dates_Budget)&" - "&last(Time_Dates_Budget)-1

Time_Range_History

History Time Range

Global

Data: first(Time_Dates_History)&" - "&last(Time_Dates_History)-1

Activity-Based Budget
Organization: ABC, Inc.
Labels
Model Start

1/1/2010

Variable

Display Label

Comment

Activities_Dim

Activities_Dim

This variable stores the display names of the items in dimension 'Activity Drivers'. This
variable is used internally and can be ignored by the user.

Activity_Actual_Time

Actual Activity Count

Actual activity counts for each activity driver, for each time period in the budget time range

Activity_Budget

Activity Budget

Forecasted total activity count for each activity driver during the entire budget time range

Activity_Budget_Growth_pct_Period

Acitivity Budget Growth%/Period

The rate of growth of activity level per time period during the budget time range

Activity_Budget_Growth_pct_Yr

Activity Budget Growth (%/Yr)

The annual rate of growth of activity level during the budget time range

Activity_Budget_Time

Activity Budget

Forecasted activity levels for each activity driver, for each time period in the budget time
range

Activity_Budget_Time_In

Activity Budget

Forecasted activity levels for each activity driver, for each time period in the budget time
range.
The values are computed from the total budgeted activity counts and activity growth rates
above. You can override these values by entering numbers or formulas directly in the shaded
cells.

Activity_Description

Activity Description (text)

Descriptions for each of the the activities that drive expenses

Activity_History

Activity History

Historical activity counts for each activity that drives expense

Activity_History_tsum

Activity History

Historical activity counts for each activity that drives expense, summed over history time

Activity_Variance_pct_Time

Activity Variance %

Variance percent for Activity Count = (Actual Activity Count) / (Budgeted Activity Count) -1, by
Activity Driver by time period in the budget time range

Activity_Variance_Time

Variance - Activity Count

Variance of Activity Count = Actual Activity Count - Budgeted Activity Count, by Activity Driver
by time period in the budget time range

Driver_Num

Driver Num

Expense_Actual_Time

Actual Expense

Actual total expense for each expense account, during the budget time period

Expense_Budget

Expense Budget

Forecasted total expense for each expense account, during the budget time period

Expense_Budget_Time

Expense Budget

For each expense account, the forecasted expense during the budget time period

Expense_Fixed_Budget

Fixed Expense Budget

For each expense account, the budgeted fixed portion of expense for budget time

Expense_Fixed_Budget_Time

Fixed Expense Budget

For each expense account, the budgeted fixed portion of expense for the budget time period

Expense_Fixed_History

Fixed Expense History

For each expense account, the history of the fixed portion of expenses. This amount is
subtracted from total expense history to obtain the variable expense history

Expense_Fixed_History_tsum

Fixed Expense History

For each expense account, the history of the fixed portion of expenses, summed over history
time. This amount is subtracted from total expense history to obtain the variable expense
history

Expense_Fixed_Time

Fixed Expense

For each expense account, the history and budget of the fixed portion of expenses.

Expense_History

Expense History

For each expense account, the history of expenses

Expense_History_tsum

Expense History

For each expense account, the history of expenses, summed over history time

Expense_Variance_pct_Time

Expense Variance %

Variance percent for total expense = (Actual Expense) / (Budgeted Expense) -1, by Activity
Driver by time period in the budget time range

Expense_Variance_Time

Variance - Expense

Variance of total Expense = Actual Expense - Budgeted Expense, by Activity Driver by time
period in the budget time range

ExpVar_Budget

Variable Expense Budget

Total budgeted variable expenses during the budget time period, segmented by expense
account (but by time period)

ExpVar_Budget_Activities

Var Expense Budget by Activity

Budgeted variable expenses, segmented by activity, by expense type, and by time period

ExpVar_Budget_Activities_Time

Var Expense Budget by Activity

Budgeted variable expenses, segmented by activity, by expense type, and by time period

ExpVar_Budget_Drivers_Time

Variable Expense Budget

Budgeted variable expenses, segmented by expense account, by activity driver, and by time
period

ExpVar_Budget_Time

Variable Expense Budget

Budgeted variable expenses, segmented by expense account and by time period (but not by
activity driver)

ExpVar_Driver_Coef

Budget Expense / Activity Count

Expense amount per activity count, for each expense account and for each activity driver in
the budget

ExpVar_Driver_Coef_Num

Coefficient

For each expense account, the coefficient of each relevant activity driver in the budget for
variable expense

ExpVar_Driver_Ratio_Hist

Historical Expense / Activity Count

For each expense account and each relevant activity driver, the historical ratio (variable
expense) / (activity level) / (number of drivers for this expense account). This ratio allocates
the historical expense evenly among the activity drivers for each expense account.

ExpVar_Driver_Wgts_In

Driver Weights Input

Weights for splitting historical expense over drivers of an expense account, unnormalized

ExpVar_Driver_Wgts_Normed

Normalized Driver Weights

Weights for splitting historical expense over drivers of an expense account, normalized

ExpVar_Drivers

Activity Drivers

For each expense account, a list of relevant activity drivers for that variable expense. In the
customizable model, you can specify the maximum number of drivers for any expense
account.

ExpVar_Drivers_Count

Count of Variable Expense Drivers

This variable counts the number of activity drivers that drive each expense account. When
computing the historical cost coefficient, this variable is used to divide the historical expense
in each account evenly among the drivers of that account.

ExpVar_History

Variable Expense History

For each expense account, the history of expenses

ExpVar_History_tsum

Variable Expense History

For each expense account, the history of expenses, summed over history time

Organization_Name

Organization Name

The name of the organization for which the model is made

Time_Budget

Time Budget

Time in the budget time range, expressed in years

Time_Dates_Budget

Time Dates Budget

Starting dates of each time period in the budget time range

Time_Dates_History

Time Dates History

Starting dates of each time period in the history time range

Time_Range_Budget

Budget Time Range

The time period for the budget, expressed as a string or number. This data is for display only;
it is not used in the model.

Time_Range_History

History Time Range

The time period for historical data, expressed as a string or number. This data is for display
only; it is not used in the model.

Dimension (item)

Display Item As

Total As

Level As

Comment

Activities

Activities

Total

Activity

A list of the activities that drive expenses

Sales_Units_A

Sales Units A

Sales_Units_B

Sales Units B

Driver_Counters

Driver Counters

Driver_1

Driver 1

Driver_2

Driver 2

Expense_Accts
Cost_Center_A

Total

Driver_Counter

Total

Expense_Accts

Cost Center A

Subtotal

Expense_Accts

Labor

Overhead

Overhead
Cost Center B

Labor

Labor

Material

Material

Names that count the activity drivers for each expense account. The names are of no
importance.

Driver_Counter

Expense Accts

Labor
Cost_Center_B

Activity_Metrics

Expense Accts 2
Subtotal

Expense accounts whose budgets are driven by the activities tracked in the model

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