The Operating Plan includes a spreadsheet detailing expenses for each department in the enterprise. Since most expense items are driven by headcount, a department budget starts with a section that tracks personnel and salary costs. The second section then extrapolates an expense line for each expense item. Expense items are generally defined to match exactly to the Company's General Ledger account structure, so that historical data and updates from actual results can be easily copied over.
Special expense categories such as rent, travel, Cloud Computing charges or Help Desk expenses are calculated in their own sub-models within the appropriate Department spreadsheet. All variable expenses are ratio driven and tie to primary drivers, such as unit sales, total number of customers or headcount employed, which in turn are driven by the primary revenue assumptions so that all variable expenses shift up and down naturally with changes in the revenue projections. This approach ensures that the model behaves like a real business and can be used for accurate scenario generation and sensitivity analysis.
Here is the Staffing section from a typical Department Budget:
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