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acc wk 8 check - 1 Production data for a selected activity...

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What is a flexible budget? -A flexible budget plans the budget data for various levels of activity. It is a series of static budgets at different levels of activity. What are the steps to developing a flexible budget? -There a four steps in developing a flexible budget and they are: 1. Identify the activity index and the relevant range of activity. 2. Identify the variable costs and determine the budgeted variable cost per unit of activity for each cost. 3. Identify the fixed costs, and determine the budgeted amount for each cost. 4. Prepare the budget for selected increments of activity within the relevant range. What information is found on a flexible budget report? - There are two sections in the flexible budget report:
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Unformatted text preview: 1. Production data for a selected activity index, such as the direct labor hours. 2. Cost data for variable and fixed costs. The report evaluates the manager’s performance in two areas: production control and cost control. These reports are used in the production and service departments of a company. How is the information used to evaluate performance?-The report gives a reliable source. Actual and budget costs are based on the activity level. The variable costs are generally acquired by the department. The difference between the budget allowance for those hours and the actual costs are the department manager’s responsibilities....
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