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Unformatted text preview: 1 1 Ch 10 Flexible Budgets ADM 2341 Ch 10/11 Standard Costs/Flexible Budgets The Income Statement Rev VC CM FC Income Master Budget (planned outcome) Flexible Budget (for actual output) Actual Results (for actual output) Purpose is to isolate the causes of differences between the xx's 2 Ch 10 Flexible Budgets ADM 2341 Ch 10 Flexible Budgets Standard Costs A standard can be defined as a benchmark or "norm" for measuring performance. Standards are used in many facets of day-to-day life. The broadest application of the standard cost idea is probably found in manufacturing and repetitive services firms. Such firms develop standards in detail for the materials , labor , and overhead cost of each separate product line. 3 Ch 10 Flexible Budgets ADM 2341 Ideal vs Practical Standards Ideal standards allow for no machine breakdowns or work interruptions, and can be attained only by working at peak effort 100 percent of the time. Such standards: • probably discourage workers • can't be used for decision purposes...
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This note was uploaded on 09/13/2011 for the course ADM 2341 taught by Professor Managerialaccounting during the Winter '07 term at University of Ottawa.
- Winter '07