ACC221ch11sp08

ACC221ch11sp08 - ACC221 Chapter 11 Flexible Budgets and...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
1 ACC221 Chapter 11 Flexible Budgets and Overhead Analysis 2 Objectives 1. Prepare a flexible budget and explain the advantages of the flexible budget approach over the static budget approach. 2. Prepare a performance report for both variable and fixed overhead costs using the flexible budget approach. 3. Use the flexible budget to prepare a variable overhead performance report containing only a spending variance.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
3 Objectives 4. Use the flexible budget to prepare a variable overhead performance report containing both a spending and an efficiency variance. 5. Compute the predetermined overhead rate and apply to overhead to products in a standard cost system. 6. Compute and interpret the fixed overhead budget and volume variances. 4 Objective 1 Prepare a flexible budget and explain the advantages of the flexible budget approach over the static budget approach.
Background image of page 2
5 Types of Budgets Static budget – prepared at the beginning of the budgeting period and is valid for only the planned level of activity. Flexible budget – provides estimates of what costs should be for any level of activity within a specified range. 6 Flexible vs. Static Budgets Flexible • Costs are compared to what the costs should have been for the actual level of activity rather than budgeted costs from the original budget. Static • Suitable for planning • Inadequate for evaluating how well costs are controlled. • If activity differs from budgeted activity, budget differences are misleading.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
7 Flexible Budgets • 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. • Reveal variances related to cost control. • Improve performance evaluation. 8 Objective 2 Prepare a performance report for both variable and fixed overhead costs using the flexible budget approach.
Background image of page 4
9 Flexible Budget Approach to Overhead costs • Budget for overhead is based on the actual activity for the period. • Budget is prepared by multiplying the
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/09/2008 for the course ACC 221 taught by Professor Tribunella during the Spring '08 term at Rochester.

Page1 / 16

ACC221ch11sp08 - ACC221 Chapter 11 Flexible Budgets and...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online