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Chapter 11

Chapter 11 - Flexible Budgets and Overhead Analysis
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Department
Accounting
Course
ACC 406
Professor
Vincent Cappelli
Semester
Winter

Description
stWednesday March 21 2012 Chapter 11 Flexible Budgets and Overhead Analysis Using Budgets for Performance Evaluation budgets are useful for both planning and control they are often used as a benchmark for performance evaluationStatic Budget versus Flexible Budget performance report compares actual costs with budgeted costs 2 possibilities exist for making this comparison1 Comparison of actual costs with the budgeted costs for the budgeted level of activity2 Comparison of actual costs with the actual level of activity First choice is a report based on static budgets whereas the second choice is for a report based on flexible budgetsStatic Budgets and Performance Reports static budget is a budget for a particular level of activity usually prepared at the beginning of the period master budgets are generally created for a particular level of activityOne way to prepare a performance report is to compare the actual costs with the budgeted costs from the master budgetEthicsFlexible Budgets enables a firm to compute expected costs for a range of activity levels the key to flexible budgeting is knowledge of fixed and variable costs there are 2 types of flexible budgets 1 B
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