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25 Cards in this Set
- Front
- Back
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benchmarking |
= evaluating practice of comparing and analyzing company financial performance with other companies or standards |
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budget report |
report comparing actual results to planned objectives |
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what limits usefulness to managers of fixed budget performance reports |
does not reflect differences that occur simply because actual volume is different from budgeted volume. This is a serious limitation when evaluating the reasonableness of actual revenues and costs. |
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fixed budget vs flexible budget |
The whole idea between fixed and flexible is that you must re-classify the expenses. From COGS and Exp to variable expenses and fixed expenses. Fixed: sales - COGS - EXP = OI Flexible: Sales - VC = CM - FC = OI |
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chart, fixed budget |
FIXED BUDGET units Q Sales $ -COGS -Expenses =OI |
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chart, flexible budget |
FLEXIBLE BUDGET = contribution margin format (list q in columns) sales VC CM FC IO |
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variable budget |
same thing as flexible budget |
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main purpose of flexible budget |
flexible budget to help managers better evaluate past performance, which can improve their abilities to monitor and control operations |
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flexible budgets vs flexible budget performance report |
flex budget: shows budget for more than one Q Flex budget PERF REPORT: compares flex budget for actual Q vs actual results, includes variances |
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correct titling for flexible budget performance report |
XYZ Company Flexible Budget Performance Report For Year (period) Ended December 31, 2013 |
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what is a standard cost card |
includes DL, DM and OH the expected, or budgeted, cost. it is the estimated cost per unit |
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management by exception |
focusing on the most significant variances for analysis and action strategies. less attention given to areas where performance is close enough to the standard |
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ideal standard vs practical standard |
ideal standard = quantity of material used if manufacturing is 100% efficient practical standard = also takes into account a reasonable amount of efficiency |
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why is there a cost card |
A cost card has the estimated (budgeted) cost per item to manufacture. It includes DL/unit, DM/unit and OH/unit. It is needed for manufacturing statement. |
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how to change from fixed budget report to flexible budget performance report |
use fixed budget Q to find VC/unit use fixed budget to find total FC Write in CM format Use actual Q in flexible budget column (with budgeted VC/unit and budgeted FC) Use actual costs in actual column |
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usefulness of flexibility budgeting |
A FBPR is useful for variance analysis. VA = the difference between actual performance and budgeted performance - important that the budgeted and actual results are based on the same level of activity |
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in what way is a VC considered constant? |
VC is constant per unit cost. (within the relevant range) |
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what dept is usually responsible for labor rate variance |
The human resource department is usually responsible for a labor rate variance. |
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what dept is usually responsible for labor efficiency variance |
The production department is usually responsible for a labor efficiency variance. |
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why have standard costs |
to have a basis to assess the reasonableness of actual costs. standard costs v. actual costs helps management identify differences and pursue why |
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what is a standard cost card |
record that has standard cost information. DL, DM, and OH |
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management by exception |
managing by focusing on large differences from standard costs |
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standard cost |
preset cost for delivering s product or service under normal conditions |
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ideal standard |
quality of inout required if a production is 100 % efficient |
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practical standard |
quantity of input under normal conditions |
