Assignment - cost and determining the budgeted variable...

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Respond in 200 to 300 words, to the following: o What is a flexible budget? o What are the steps to developing a flexible budget? o What information is found on a flexible budget report? o How is that information used to evaluate performance? Post your response to the body of the Individual Forum, not as an attachment. A flexible budget is a budget that changes based on the volume or level of activity. This budget is used as a performance tool to indicate how well or how poor the actual sales or activity is to the budget. As with the restaurant I work in the Key Performance Indicator (KPI) helps to determine whether or not management will receive quarterly bonuses based on performance to budget. Some indicators used are sales increased to last year, labor control, inventory, etc. This is a great tool to help you target your goals toward the budget. The steps used to develop the flexible budget are: identifying the activity index and the relevancy range of activities, identifying the variable
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Unformatted text preview: cost and determining the budgeted variable cost per unit of activity, identifying fixed costs and determining the budget amount for the cost, and preparing the budget for the amount of activity within the time period range. The information found on the flexible budget report is the variable costs which include: labor, materials, and overhead; the fixed costs which include: manufacturing, advertising and marketing, and any other fixed costs; the contribution margin and operating income. In conclusion, the flexible budget is a key indicator to how well you are keeping to the budgeted sales activities, labor, expenses, etc. This tells whether you are able to control your budget or whether you let the budget control you. If the budget is exceeded in a positive way then you are doing well it means more profit to the bottom line, if you are doing bad it means a loss or profit and margin to the company and to you....
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This note was uploaded on 06/13/2010 for the course ACCOUNTING 250 taught by Professor Connie during the Spring '10 term at Phoenix School of Law.

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