COMMERCE 2AB3 Chapter Notes - Chapter 11: Profit Center, Weighted Arithmetic Mean, Variable Cost
4 Apr 2017
School
Department
Course
Professor
Document Summary
The concept of budgetary control and static budget reports. Budgetary control: the use of budgets to control operations. Static budget: a projection of budget data at one level of activity. Step 1: identify the activity index and the relevant range of activity. Step 2: identify the variable costs, and determine the budgeted variable cost per unit of activity for each cost. Step 3: identify the fixed costs, and determine the budgeted amount for each cost. Step 4: prepare the budget for selected increments of activity within the relevant range. The flexible budget report has two sections: (1) production data for a selected activity index, such as direct labour hours, and (2) cost data for variable and fixed costs. Decentralization: the situation that exists when control of operations is given to many managers throughout the organization. Segment: an area of responsibility in decentralized operations. Controllable costs: costs that a manager has the authority to incur within a specific period of time.
