ch21 - Chapter 21 The Navigator Scan Study Objectives Read...

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Chapter 21 The Navigator Scan Study Objectives Read Preview Read Chapter Review Work Demonstration Problem Answer True-False Statements Answer Multiple-Choice Questions Match Terms and Definitions Solve Exercises B UDGETARY CONTROL AND RESPONSIBILITY ACCOUNTING CHAPTER STUDY OBJECTIVES After studying this chapter, you should be able to: 1. Describe the concept of budgetary control. 2. Evaluate the usefulness of static budget reports. 3. Explain the development of flexible budgets and the usefulness of flexible budget reports. 4. Describe the concept of responsibility accounting. 5. Indicate the features of responsibility reports for cost centers. 6. Identify the content of responsibility reports for profit centers. 7. Explain the basis and formula used in evaluating performance in investment centers. *8. Explain the difference between ROI and residual income. *Note: All asterisked (*) items relate to material contained in the Appendix to the chapter. The Navigator PREVIEW OF CHAPTER 21 In contrast to Chapter 20, we now consider how budgets are used by management to control operations. This chapter focuses on two aspects of management control: (1) budgetary control and (2) responsibility accounting. The content and organization of this chapter are as follows: Concept of Concept of Budgetary Control Types of Responsibility Controllable vs. Responsibility Accounting Noncontrollable Reporting System BUDGETARY ACCOUNTING CONTROL AND RESPONSIBILITY Centers Why Flexible Budgets? Flexible Budgets Development Case Study Reports Management by Exception Static Budget Reports Illustrations Uses and Limita- tions Cost Centers Performance Evalua- Investment Centers The Navigator Profit Centers tion
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21-2 Kimmel Accounting: Tools for Business Decision Making _____________________________________________________________________________ CHAPTER REVIEW Budgetary Control 1. (S.O. 1) The use of budgets in controlling operations is known as budgetary control. Such control takes place by means of budget reports that compare actual results with planned objectives. The budget reports provide management with feedback on operations. 2. Budgetary control involves: a. Developing budgets. b. control.
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Chapter 21 Budgetary Control and Responsibility Accounting 21-3 _____________________________________________________________________________ 9. The following formula may be used to determine total budgeted costs at any level of activity: Total budgeted costs = Fixed costs + (Total variable cost per unit X activity level) 10. Total budgeted costs at each level of activity can be shown graphically. a. In a graph, the activity index is shown on the horizontal axis and costs are shown on the vertical axis. b.
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ch21 - Chapter 21 The Navigator Scan Study Objectives Read...

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