Last month we defined three steps necessary to analyze an equipment account and obtain the information required to manage results and achieve financial targets. First, ensure that all revenue is correctly reported. Second, ensure that costs and revenues balance within each class or equipment group. Third, ensure that costs and revenues balance by the four major cost categories: owning costs, operating costs, fuel and overhead.rnManagers who follow these three steps are better able to understand the reasons for budget variances, take appropriate action, and ensure that budgeted revenue and actual cost are as closely aligned as possible. Even so, budget variances will occur and will need to be consolidated or reassigned.rnEmotions and creativity kick in when it comes to reassigning a negative variance that impacts the bottom line of an operating statement. Emotions and creativity kick in when it comes to reassigning a negative variance that impacts the bottom line of an operating statement. A number of fairly standard methods are found in practice.
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