The actual dollar figure may be less or more than the budgeted figure due to what?

• A. Circumstances you cannot assume will exist during the coming year.
• B. Inflation always fixed at 2%.
• C. Members' preference alone.
• D. Only one line item changes.

Answer: (A)

Budgets are educated guesses built on assumptions about what will happen in the coming year. Because the future can’t be predicted with certainty, the actual results will typically differ from what was planned. The amount spent or earned can end up higher or lower as conditions change, such as unexpected maintenance needs, price fluctuations, or shifts in service levels. That’s why the statement about circumstances you cannot assume will exist during the coming year best explains why the final figure may differ from the budget.

Inflation isn’t fixed at a specific rate, so it’s not a reliable sole explanation for all variances. Members’ preferences can influence some costs, but they don’t account for all fluctuations. And it isn’t limited to one line item changing—several areas can drift away from projections.