ACC 406 Chapter Notes - Chapter 11: Stabilisation Force In Bosnia And Herzegovina, Deutsche Luft Hansa
Document Summary
Budgets are useful for planning and control, often used as benchmarks for performance evaluation. A performance report compares actual costs with budgeted costs in the following ways: compare actual costs with the budgeted costs for the budgeted level of activity, compare actual costs with the actual level of activity. The first choice requires a report based on static budgets, whereas the second choice needs a report based on flexible budgets. Static budget is a budget prepared in advance based on a particular level of activity and isn"t adjusted or altered regardless of any changes in actual output, revenues, or costs. Flexible budget enables a firm to compute the expected costs per unit and then estimate costs for a range of activity levels or production volumes. The key is knowledge of fixed and variable costs. Gives the expected outcomes for a range of activity levels or production volumes. Based on the actual level of activity achieve in the period.