TAILIEUCHUNG - Lecture Managerial accounting - Chapter 9: Flexible budgets and performance analysis
This chapter explores how budgets can be adjusted so that meaningful comparisons to actual costs can be made. This chapter include objectives: Prepare a flexible budget, prepare a report showing activity variances, prepare a report showing revenue and spending variances, prepare a performance report that combines activity variances and revenue and spending variances, prepare a flexible budget with more than one cost driver, understand common errors made in preparing performance reports based on budgets and actual results. | Flexible Budgets and Performance Analysis Chapter 09 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9: Flexible Budgets and Performance Analysis This chapter explores how budgets can be adjusted so that meaningful comparisons to actual costs can be made. Improve performance evaluation. May be prepared for any activity level in the relevant range. Show costs that should have been incurred at the actual level of activity, enabling “apples to apples” cost comparisons. Help managers control costs. Let’s look at Larry’s Lawn Service. Characteristics of Flexible Budgets A flexible budget provides estimates of what revenues and costs should be for any level of activity, within a specified range. When used for performance evaluation purposes, actual costs are compared to what the costs should have been for the actual level of activity during the period. This enables “apples-to-apples” cost comparisons. Larry’s Lawn Service provides lawn .
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