AFM102 Lecture Notes - Operating Cash Flow, Cash Flow, Job Satisfaction
16 Oct 2011
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Document Summary
Capacity related costs are fixed, and are based on the projected volume of product going to be produced. Help anticipate potential problems serves to coordinate many activities. Operating budgets - summarize the level of activities such as sales, purchasing, and production. Financial budgets - identify the expected financial consequences of the activities summarized in the operating budgets. Production = minimum ( total demand , production capacity of each resource ) Net cash flow = cash inflow cash outflow. Ending cash = net operating cash flow + opening cash +- effects of financial operations. Cash outflow = units of flexible resource purchased x prince per unit of flexible resource. Budgeted amount = standard price per unit x budgeted quantity. Actual amount = actual price per unit x actual quantity. First level variance = actual costs budgeted costs favorable if negative , unfavorable if positive. Flexible budget: take standard costs with actual volume. Planning variance= flexible budget planned budget.
