Ch 22 outline

Ch 22 outline - For Chapter 22 only learning objective 3...

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For Chapter 22 only learning objective 3 C22 Lo3: Prepare a flexible budget, and describe how managers use variance analysis to control costs. Brief Overview Variance analysis is the process of computing the differences between standard costs and actual costs and identifying the causes of those differences. Flexible budgets are used to improve the accuracy of variance analysis. Unlike a static, or fixed, budget, which forecasts revenues and expenses for just one level of sales and just one level of output, a flexible budget summarizes expected costs for a range of activity levels. The forecasted data that it provides can be adjusted for changes in the level of output. The variable cost per unit and total fixed costs presented in a flexible budget are components of the flexible budget formula, an equation that determines the total budgeted costs for a range of levels of output. The flexible budget formula has the following format: Total Budgeted Costs = (Variable Cost per Unit × Number of Units Produced)
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This note was uploaded on 04/25/2011 for the course ACC 101 taught by Professor Dasd during the Winter '08 term at DePaul.

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