Issue addressed by this output

Company expenditure accounts can be complex and overwhelming when they are presented as tables of numbers.
Use this output from the software to address the question: How can I get a better overview of what my organisation spends its money on?

Underlying calculation

Rather than a calculation this is a graphical presentation of your organisation’s raw expenditure data. The histogram can show your expenditure account either in National Accounts categories, using the conversion table or your organisation’s own categories.

National Accounts category		Expenditure ($)
Apples and pears		52,004
Eggs		66,762
Oilseeds		1,623
Milk		25,926
Chicken		69,861
Oats & wheat		10,673
Flour		120,000
Corn		142,582
Potatoes		80,245
Electricity		56264
Water		1,479
Bottled gas		7,662
Town gas		29.191
Milk powder		49,686
Cheese		36,434
Butter		29,872
SR Flour		10,955
Gluten		65,252
New Oven		267,236
Refined sugar		66,444
Red meat		253,894
Paperboard containers and plates		59,157
Advertising		15,786
Tax accountant		13,714
Wages and salaries		1,054,700
Business tax		390.700

The example table above shows MyBakery’s expenditure in dollars. The software allows you to change this to show $k, $m, or $b if preferred. All units can be changed to suit the needs of your organisation.

Expenditure histogram for MyBakery

The bars in this histogram represent your expenditure account, after

• deflating into 1998-99 prices,
• re-classifying into the National Accounts’ product groups
• converting from purchasers’ prices to basic prices.

Because of the above conversions, the values you see in the histogram may be different from the values you entered. Also you may find some items that you didn’t enter at all, for example ‘Retail trade’ or ‘Road freight’. This is the result of the conversion from purchasers’ prices to basic prices; the software engine has subtracted the retail and freight margins from your purchases, and allocated them correctly to the industries that supply these margins. Finally, the graph doesn’t show items that are less than 1% of your total turnover, simply because the bars would be too small to read.

From the expenditure graph in the figure above you can readily see that most of MyBakery money is spent on wages and salaries, meat, wheat flour and vegetables, which are all basic inputs into making pies.

Using the output

Scenario
You are asked to introduce new procurement policies because the organisation wants to be proactive about cost saving and reporting. As a first step the organisation asks you to prepare an overview of where their money is being spent. The information is currently buried in detailed accounts. You need to distil the information into something that is easy for the executive to see at a glance.

You enter the organisation’s accounts into the software and reclassify expenditure items into national accounts classifications.. The software calculates an expenditure histogram for you.

What the output means

From the histogram you can readily see that most of the organisation’s money is spent on Wages and salaries. After Taxes and Surplus the next largest outlay is on Vegetables and then Fresh meat.

From this picture of MyBakery’s spending, and depending on the indicators you have chosen, you might want to focus investigations on Vegetables and Fresh meat.

This expenditure graph can be compared with similar graphs on TBL indicator impacts (see Commodity Graphs). Such comparisons reveal trade-offs between improving impacts and reducing cost.

Next: Revenue graph