Study Guides (390,000)
CA (150,000)
COMM (30)
Final

COMM-2016EL Study Guide - Final Guide: Variable Cost


Department
Commerce and Administration
Course Code
COMM-2016EL
Professor
Kayla Levesque
Study Guide
Final

This preview shows half of the first page. to view the full 2 pages of the document.
Budgets Let’s Get Flexible!
Static Budget is a boring budget! It is based on only one level of output.
It is not adjusted for volume after it is set. Example…The “Master Budget”.
Static Budget “
Variance”
is the difference between the static budget
amount and the actual results!
- the variance is considered “favourable” if actual
results have a higher operating income than the
static budget showed!
- the variance is “unfavourable” if actual results
show operating income LESS than the static
budget.
Flexible (fun) Budget! is a budget that is calculated using the budgeted
(standard) revenue and/or cost amounts
based on the level of
output actually achieved!
You use the
budgeted
quantities, &
budgeted
unit prices and
budgeted unit
costs for the actual
amount of finished goods produced and sold!
Flexible Budget Variance is the difference between the flexible budget
amount and the actual results!
(Hint: note the
static budget variance is the difference between
the “static budget” amount and the actual results!
If there is the term “budget” in the variance, then
you calculate the variance by taking the difference
between the “budget” (either static or flexible)
and the “actual” results!
Sales Volume Variance is the difference between the
static budget
and the
flexible budget
amounts. Note the “sales volume
variance” can apply to both revenue and cost
amounts!
You're Reading a Preview

Unlock to view full version