Lecture 11_05_10 - Chapter8conclusion Performance analysis...

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Managerial Accounting Chapter 8 - conclusion
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Performance analysis with combined activity variance and revenue and spending variances
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What assumption(s) were made about behavior of variable  costs?
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What  other factors can drive the variable costs in this case? -  Each variable cost can depend on a different cost driver . -  Number of clients -  Number of hours of operation -  Both number of clients and hours of operation For example: -  employees are paid by the hours -  Cost of electricity depends on both number of clients  served and the hours the hair salon is open for business. -   Flexible budget with multiple cost drivers: - q1  = number of clients - q2  = hours of operation
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Flexible budget with single cost  driver Flexible budget with multiple cost  drivers
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Example of performance analysis in non-profit organization Problem 8.20
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Facts: -Continued support from the government depends on the blood bank’s ability to control its cost.
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