Mid-Year Budget Transfer
The communications unit has a EUR 2.4 million annual budget split across three workstreams: A 45%, B 35%, C 20%. By 30 June, A has spent 62% of its allocation, B 48%, C 71%. The head of unit proposes transferring EUR 180,000 from B to C. A standing rule caps workstream C at 25% of the total annual budget; no other cap applies. The finance officer confirms that only unspent allocations can be transferred and that the transfer must leave B with at least EUR 300,000 of unspent allocation.
1. Calculate the unspent allocation for each workstream and test the proposed EUR 180,000 transfer against both constraints.
Read the worked answer
Allocations: A = 45% x 2,400,000 = 1,080,000; B = 35% x 2,400,000 = 840,000; C = 20% x 2,400,000 = 480,000.
Spent: A = 62% x 1,080,000 = 669,600; B = 48% x 840,000 = 403,200; C = 71% x 480,000 = 340,800.
Unspent: A = 410,400; B = 436,800; C = 139,200.
Proposed transfer of 180,000 from B to C:
- C allocation becomes 480,000 + 180,000 = 660,000, which is 27.5% of 2.4m and above the 25% cap of 600,000. Fails.
- B unspent becomes 436,800 - 180,000 = 256,800, below the required EUR 300,000. Fails.
The proposal breaches both constraints.
2. What is the maximum permissible transfer from B to C, and what percentage of C's allocation would then be spent?
Read the worked answer
C's cap allows 600,000 - 480,000 = 120,000.
Check the B constraint at 120,000: B unspent would be 436,800 - 120,000 = 316,800, which is above 300,000. So the maximum is EUR 120,000.
After the transfer, C's allocation is 600,000 and C has spent 340,800. Spend rate = 340,800 / 600,000 = 56.8%.
3. If finance insists that B retain EUR 350,000 of unspent allocation, what is the maximum transfer?
Read the worked answer
B currently has 436,800 unspent. The B constraint permits at most 436,800 - 350,000 = 86,800 to be transferred.
The C cap would allow 120,000, so the binding constraint is B's EUR 350,000 floor. Maximum transfer: EUR 86,800. C's allocation would become 566,800, still below the 600,000 cap.