ACCT208 Lecture Notes - Lecture 9: Three Steps

• School: University of Delaware
• Department: Accounting
• Course: ACCT208
• Professor: Debra Dragone

Document Summary

Lecture outline for accounting 208 chapter 9: flexible budgets and performance analysis. Answers the question: how well are we doing? (control part of decision-making) All revenues and expenses are estimated at the target level of activity (in chapter 8 it was sales volume) Take the planning budget and adjust it to show what revenues and costs (cid:498)should be(cid:499) at the level we actually attained for that period not the planned level. The difference stated in terms of being(cid:499) favorable(cid:499) (cid:498) f(cid:499) or (cid:498)unfavorable(cid:499) (cid:498)u(cid:499) )f actual no)=(cid:882)(cid:882), and the planning budget compiled before the year begins; no)=(cid:882)(cid:882)(cid:882), you: management tool- variance investigated if they are significant: would need to investigate the cause- called variance analysis. Handout: first step: create the flexible budget. Intermediate step between actual results and what you planned prior to the start of the year with your planning budget (ch. 8: second step: compute revenue and expense variances, revenue variance.