Reviewing Internal Sales
Activity / Rates
Internal / External Sales Office
Learning Objectives
Internal Sales Activity related to:
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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
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Compare budgeted revenues, resources, depreciation and
other expenditures to the current year-end results on a lineby-line basis
Identify large variances and determine reason for variance
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Determine if all resources are used as planned
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Recharge center sold more than expected, costs of materials
higher/lower, unexpected downtime, purchasing more than required
Personal, materials, equipment, etc.
Depreciable life versus remaining useful life of capital assets
should be analyzed
Budget Considerations
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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
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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
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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: http://www.finsys.umn.edu/sales/int.html
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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