Reviewing Internal Sales Activity / Rates Reviewing Internal Sales Activity / Rates Internal / External Sales Office

Learning Objectives Internal Sales Activity related to: Annual review Review Business Plan Budget to Actual Analysis Budget Considerations Reducing Budget Variances Surplus or Deficit Submit & Implement Rates

Annual Review Monitor internal sales activity throughout the year o Identify potential significant surplus or deficit o Work with the Internal Sales Office to determine best course of action Rate review should be performed at the close of the fiscal year The preceding year's financial information will provide the basis for developing the following year's rate

Review Business Plan Continue to qualify to conduct internal sales activity? o Annual internal sales revenue greater than $25,000 o Charging a federal grant of any dollar amount Provide the services that are identified on the original business plan? Provide a service that cannot be met elsewhere? Should the internal sales activity be continued?

Case Study Documents used: Reporting Center o Account Budget Status for Current Non Sponsored Funds o Actual Account Summary by Accounting Period for Current Funds o Salary and Fringe Detail by Pay Period o Asset Management Depreciation Expense/Schedule Internal Sales Reconciliation Template Rate Development Reconciliation Template

Budget to Actual Analysis Compare budgeted revenues, resources, depreciation and other expenditures to the current year-end results on a line- by-line basis Identify large variances and determine reason for variance o Recharge center sold more than expected, costs of materials higher/lower, unexpected downtime, purchasing more than required Determine if all resources are used as planned o Personal, materials, equipment, etc. Depreciable life versus remaining useful life of capital assets should be analyzed

Budget Considerations Salary & Fringe adjustments Salary allocations Capital equipment added, fully depreciated or improved Purchases of non capital equipment Equipment repairs Maintenance contracts renewed or expired New services provided

Reducing Budget Variances Productive time vs. hourly wages Production volume estimates Cost estimates Include all costs Detailed analysis of variable vs. fixed costs variances o Too few/many rates When to round o Estimated values or rates

Surplus or Deficit Surplus or deficits from prior year should be considered as indicator of a potential rate change Handling of surplus/deficit less than 15% o While it is good practice, there may be instances in which the recharge center chooses to forgo including a surplus/deficit less than 15% in the next year rates Work with the Internal Sales Office for variances greater than 15% o Any excessive surplus may require refunding the customers o Any excessive deficit may require a subsidy from the college or department

Submit & Implement Rates Submit rates to the Chief Financial Manager Upon approval, distribute rates locally Implement the new rate o Charge the customers the new rates when available

Summary Monitor activity throughout the year Review current year sales activity & business plan Analyze variances between actual & budget Determine potential rate change Implement the new rate

Internal Sales Rate Development Procedure & Website Internal Sales website: Reviewing Internal Sales Activity Job Aid Internal Sales Reconciliation for Surplus and Deficits Calculation for Billable Hours Beginning, Intermediate and Advanced Rate Development Presentations Subsidies, Surplus, Deficit Management Presentation Equipment and Depreciation Reconciliation Presentation Administrative Procedure: Establishing Internal Sales Rates