Notes_chapter_10 -...

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I.  PLANNING  vs. FLEXIBLE BUDGETS A.  PLANNING BUDGETS (i.e., STATIC BUDGETS) A planning budget  is created at the beginning of the budgeting  period and is valid only for the budgeted level of activity; suitable  for planning. B.  FLEXIBLE BUDGETS A flexible budget  reflects costs that should have been incurred  given the actual level of activity during the period; useful in  evaluating how well costs were controlled. II. PERFORMANCE REPORTS USING FLEXIBLE BUDGETS A.      In a performance report focused on cost control, actual costs  should be compared to the flexible budget for the  actual  level of  activity—not the budget for the planned level of activity. B.     ACTIVITY VARIANCES - - C.    REVENUE and SPENDING VARIANCES - Compare what revenues/costs SHOULD HAVE BEEN given the  actual level of activity to actual costs incurred/revenues  generated during the period. 1)
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Notes_chapter_10 -...

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