TABLE OF CONTENTS

• Monitor Build Plan Budget
  • Budget tab in the Build Plan
• Budget Indicators
  • Budgeted key figures:
  • Planned/actual figures on Budget tab:
    • Totals
    • Profit Margins Current Budget
    • Profit Margins Actual
      • Service Revenue Gross Profit Margin % 
      • Service Revenue Profit Margin % 
      • Total Revenue Gross Profit Margin %
      • Total Revenue Profit Margin %
    • Profit Margins Remaining
    • Labor Hours

Monitor Build Plan Budget

Budget tab in the Build Plan

Budget details represent the allocation of budgeted/actual revenue and expenses over financial accounts.

Pending Budget shows the amount from the last pending BP Budget. There can be only one pending Budget at the same time. All amounts are taken from the pending Budget.

Initial Budget columns shows the first approved or obsolete BP Budget details.

Current Budget — the information from the last approved Budget. Again, there can be only one approve Budget per time, because the previous one will be obsolete after its revision.

For the Committed Budget column, we take:

Revenue from the total of Sales Order lines allocated to PO lines minus invoiced amount (receivable + paid amount).

Expenses include:

• The total from BOMs in the Pending and Sent to Warehouse stages
• The amount from all approved VIM Purchase Orders. This amount within a Financial Account = VIM PO Balance
  • VIM PO Balance = PO Total - Inv Approved Amount - Inv Paid Amount.

Actual Budget shows actual spend expenses and received profit.

Revenue — from CIM Invoice Financial Distributions.

Expenses are from Financial Distributions of source types: VIM Invoices, Bill of Materials, Time Keeping, CODs.

Remaining column = Current - (Committed + Actual).

Budget Indicators

Budgeted key figures:

• Pass Thru COGS $  = the total of Pass Through Budget Costs.
• Service Revenue $  = Planned Revenue (Sales Order Amount) - Pass Thru COGS 
• Direct Cost COGS $  = the total of Direct Budget Costs.
• Gross Profit Margin $ =  Service Revenue - Direct Cost COGS
• Overhead $ = Gross Profit Margin * % of OH expenses
• Profit Margin $  = Gross Profit Margin - Overhead 
• Service Revenue Gross Profit Margin % = Gross Profit Margin / Service Revenue
• Service Revenue Profit Margin % = Profit Margin / Service Revenue
• Total Revenue Gross Profit Margin % = Total Revenue Gross Profit Margin / Planned Revenue
• Total Revenue Profit Margin % = Profit Margin / Planned Revenue
  • Profit Margin = Total Revenue Gross Profit Margin - Overhead Allowance (according to Overhead Type)
    

Planned/actual figures on Budget tab:

• % of Planned = (Committed + Actual) / Current

• % of Total = (Committed + Actual) / Current Total

Totals

If a Build Plan doesn't have an approved Budget or no Budget at all, then we take the percentage of WIP from the system constant and calculate current WIP using the formula: 

WIP = Actual Spend + (Actual Spend * % WIP from the constant) – Actual Revenue.

Profit Margins Current Budget

All values are taken from the approved budget card. The calculation is shown above. 

Profit Margins Actual

Service Revenue Gross Profit Margin % 

This formula is used to calculate the Gross Profit Margin and is designed to evaluate a company's efficiency by expressing the relationship between gross profit and total revenue.

Why subtract from 1?

The Gross Profit Margin represents the difference between a company's revenue and its direct costs (COGS). The formula is set up to first calculate the proportion of costs to total revenue, and then subtract that proportion from 1 to get the proportion of profit.

1 - (costs / revenue) gives the percentage of profit relative to revenue, meaning how much of the total revenue remains after accounting for the costs.

Example:

Let’s assume we have the following data:

• Revenue = 1000
• Direct Costs (Direct Cost) = 400
• Other Costs (Pass-Through COGS) = 100

Then the calculation would be:

This means the company retains 50% of its revenue as gross profit after deducting direct costs. 

Service Revenue Profit Margin % 

Total Revenue Gross Profit Margin %

Total Revenue Profit Margin %

OH Amount = OH % from approved budget/100%

Profit Margins Remaining

Remaining = Actual - Revised 

Labor Hours

Read more about Budget:

Build Plan Budget and Budget Templates

Budget Approval Process

Budgets Dashboard