Then you have a certain product volume flow to production budget Budget what

Then you have a certain product volume flow to

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Then you have a certain product volume flow to production budget. Budget what input you will need What the COGS will be. Financial budget; put it into budgeted income statements / budgeted bs / budgeted CFS. Afterwards sort of scenario analysis and stress-testing. Cycle that companies will follow every year. Ongoing basis; analyze current performance versus expectations. You will obtain some variations and you want to examine those variation; this is what variance analysis is all about.
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Standard costs = budgeted unit costs based on carefully predetermined amounts; - Historical data; - Task analysis. Used for planning labor and material requirements as expected levels of performance. (e.g. standard costs may be lower than historical costs) Serve as benchmarks for measuring performance. (e.g. purchasing and production manager targets). Reasons for less revenue: There may be quantity effect in this number; market share smaller (selling less). Or price lower. Can we see if it is price effect or quantity effect in this table? No. = problem with comparing the overall budget with overall actual. This is first level variance here. For the costs; variances related to sales volume, input prices or efficiency We cant tell what the reasons is by only comparing actual with the variance.
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  • Fall '16
  • Perego
  • United Kingdom budget, purchasing manager

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