COMM 305 Chapter Notes - Chapter 11: Fixed Cost, Variable Cost, Economic Value Added
5 Apr 2017
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Document Summary
The concept of budgetary control and static budget reports. Budgetary control - use of budgets in controlling operations. Control achieved by using budget reports to compare annual results with planned objectives. Works best when company has formalized reporting system that identifies name of budget report. 1: states frequency of report, specifies report"s purpose. Static budget - projection of budget data at one level of activity. Difference between budgeted numbers and actual results is sometimes called budget variance. Static budget appropriate in evaluating how well manager controls costs when: actual lvl of activity closely approximates master budget activity lvl, behavior of costs in response to changes in activity fixed. Static bud. thus appropriate for fixed manu. and for fixed s&a expenses. May not be proper basis for evaluating manager"s performance in vc. Flexible budget - projects budget data for various levels of activity. Basically series of static budgets at dif levels of activity. Static budget is master budget of chapter 10.
