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359cheatsheet 2 - R.A suggests there should be no respons...

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R.A. suggests there should be no respons. without control. Flex. Budget composed of 2 separate budgets: 1) a STATIC budget for FC’s AND 2) a really FLEXIBLE budget for VCs (& Revenues). 2 components that evolved it: -Sales Vol Var (SVV): explains deviations of vol. from original plans in static (master) budget. -Pinpoint Budg. Var and break it into Price Var. & Effic. Var. Over relevant range following true: For FMOH: FOH Bud. Always constant regardless of D; FOH rate (F) varies with D chosen; Given D, F is constant. There MAY be a PVV if std inputs allowed for output achieved (Vp) differ from D. PVV is = to difference between Budgt. FOH [F D] and Applied FOH [FVp]. Therefore, PVV=F[D-Vp]. Never Effic. Var. for FOH and FOH Budt. Var. is ALWAYS equal to Spending Var. Sum of all FMOH variances = amount of under/over appl FOH. For VMOH : VOH Appl. Rate is constant regardless of D; VOH Budget varies with activ. level. VOH Applied always equal to VOH Flex. Budget based on std inputs allowed for actual output achieved. So NEVER a PVV for VOH; VOH (Flex) Bud. Variance always = under/over applied VOH. =VOH Spend var +VOH Eff. Var.
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