Chapter 15 Comments 8th ed

Chapter 15 Comments 8th ed - Instructor Comments Chapter...

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Instructor Comments Chapter Fifteen At this point in the course, you should have a firm understanding of the nature of fixed and variable costs , and how these costs react to changes in the volume of activity. Make sure that you review these ideas and the concept of contribution margin before you begin this chapter. Chapter 15 continues to build on these concepts and introduces you to some important ideas on how accounting can be used to control costs. The ideas in the last paragraph on page 577 (continued on page 578) are important. You should understand that all costs generally are controllable over time at some managerial level, but in the short run some costs may be considered non-controllable. VARIANCE ANALYSIS On page 579, an understanding of variance analysis , the concept of responsibility reporting , and management by exception are especially important. FLEXIBLE BUDGETING The idea of flexible budgeting on page 581 is one of the more important concepts in this chapter. When finished with this section, you should be able to prepare a flexible budget for any level of operating activity. MORE ON VARIANCES – FURTHER ANALYSIS Budget variances can be further broken down in standard cost accounting systems (starting on page 583). For example, the total materials variance can be broken into a materials price variance (or cost per unit of input variance) and a materials quantity variance ; (i.e., the portion of the total material variance that is due
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This note was uploaded on 04/23/2011 for the course ACC 490 taught by Professor Johnthompson during the Spring '10 term at Murray State KY.

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Chapter 15 Comments 8th ed - Instructor Comments Chapter...

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