Power point for budget of flexible budget variances. Planning of Variable and Fixed Overhead Costs.

Power point for budget of flexible budget variances. Explain in what ways the planning of variable overhead costs and fixed overhead costs are similar and in what ways they differ. com - id: 6cdb8b-Mzc0M Compute the sales volume variance and the variable cost volume variances based on a comparison between the master budget and the flexible budget. Business Accounting Accounting questions and answers A: Convert the static budget into a flexible budget. Learning Objective 1. . A static budget is prepared for onlyone level of a given type of activity. SlideServe has a very huge collection of Static budget variances PowerPoint presentations. 2. It discusses the variance analysis cycle and how flexible budgets improve performance evaluation by enabling more accurate comparisons. The Budget figure we would have used if we had known actual output in advance. It provides a detailed example using Webb Company, illustrating how to create a flexible budget and analyze variances related to direct materials and labor costs. And this May 21, 2025 · That plan focuses on product, volumes, resources. Reveal variances due to good cost control or lack of cost control. March 21, 2005. Compute flexible-budget variances and sales-activity variances. Apr 1, 2012 · Static Budgets. Calculate variances between standard and actual costs, determine their causes, identify inefficient operations, and take corrective action. Aug 2, 2022 · Managers must analyze both types of variances -positive and negative, for each line item to come up with meaningful information. • Compute flexible budget variances by comparing the flexible budget with the actual results. Charts and examples are provided to illustrate the overhead variance calculations and analysis. Planning of Variable and Fixed Overhead Costs. Flexible Budget Variance In a static budget, an entity keeps the budget amount as it is and keeps recording the actual numbers separately. Title: Flexible Budgets and Standard Costs 1 Flexible Budgets andStandard Costs Chapter 24 2 Objectives Prepare a flexible budget for the income statement Use the flexible budget to show why actual results differ from the static budget Identify the benefits of standard costs and learn how to set standards Compute standard cost variances for direct materials and direct labor Analyze This document provides an overview of flexible budgeting and performance analysis concepts across 6 learning objectives: 1. Short summary. Chapter 9. May be prepared for any activity level in the relevant range. There are two main types of variances evaluated when flexible budgets are analyzed— activity variances and revenue and spending variances. Additionally, it includes quiz questions to test understanding of the concepts presented. • Justify the favorable or unfavorable budget variances. It may require corrective action. e. Jan 2, 2025 · Learn how to prepare a flexible budget to compare actual costs accurately, control costs, and evaluate performance effectively. Flexible-Budget Variance (difference between actual and the Preparing a Flexible Budget Cost Formula per Hour Total Fixed Cost Flexible Budgets 8,000 10,000 12,000 Hours Hours Hours Feb 12, 2025 · Of course, you will need to change the figures as per the information in the case. Managers can reconcile the actual overhead costs with the overhead amounts allocated during the period. Times New Roman Monotype Sorts BlankHO Direct Input Variances, and Management Control: I Overview Standard = Budget Variances Static and Flexible Budgets Example Useful Format to Calculate DM and DL Variances Price Variance: material Price Variance: labor Efficiency Variance: DM Efficiency Variance: labor Example: calculate variances Calculation of Variances Performance Measurement Using Chapter 8 Flexible Budgets, Variances, and Management Control: II Overhead Costs Overhead costs are significant for most organizations Variable Overhead Recall that variable overhead is allocated to products and services using a budgeted variable overhead rate Separate into efficiency and spending variances Fixed Overhead Recall that fixed Nov 11, 2017 · What are examples of nonfinancial measures? Actual labor time, relative to budgeted time Actual indirect materials usage per labor-hour, relative to budgeted indirect materials usage Illustrate how the flexible- budget variance approach can be used in activity-based costing. The document outlines how to prepare a flexible budget, identify deficiencies in static planning budgets, and calculate activity, revenue, and spending variances. Efficiency is the degree to which inputs are used in relation to a given level of outputs. Summary of Variances. Create a 6- to 8-slide presentation for the budget committee meeting. The document discusses flexible budgets and overhead cost variances. Standard Inputs required to get actual outputs. This chapter focuses on how budgets specifically flexible budgets can be used to evaluate feedback on variances and aid managers Jun 30, 2012 · Flexible Budgets, Variances, and Management Control:II. Static-Budget Variance (difference between target and actual income). Aug 10, 2014 · Activity Variances Larry’s Flexible Budget Compared with the Planning Budget Activity and revenue increase by 10 percent, but net operating income increases by more than 10 percent due to the presence of fixed costs. Deficiencies of the Static Planning Budget The relevant question is . Create a 6-to 8-slide presentation for the budget committee meeting. Aug 8, 2014 · Flexible Budget A flexible budget (variable budget) is a budget that adjusts for changes in sales volume and other cost-driver activities. Chapter 10. “How much of the cost variances are due to higher activity and how much are due to cost control?” To answer the question, we must the budget to the actual level of activity. • Summary - flexible budget variances; flexible budget and the actual results. A static budget ( master budget) is prepared for only one level of a given type of activity. A flexible budget performance report is then shown comparing the flexible budget to actual results at the achieved activity level of 8,000 machine hours. Step 1: Determine budgeted selling price, variable cost per unit, and budgeted fixed cost. Chapter Fourteen. Sep 8, 2014 · Flexible Budgets and Variance Analysis Management Cycle, Standard Costing and Variance Analysis Use standard costs to prepare budgets and establish goals for product costing. Level 2. Distinguish between the product-costing and control purposes of standard costs for factory overhead Calculate and properly interpret standard cost variances for factory overhead using traditional approaches Mar 9, 2025 · A flexible budget variance is any difference between the results generated by a flexible budget model and actual results. Jan 1, 2025 · Understand flexible budgeting, standard costs, variance analysis to improve managerial control. Mar 21, 2005 · Flexible Budgets, Variances, and Management Control: II. Jan 3, 2025 · Learn about master and flexible budgets, variance analysis, and performance evaluation based on actual financial results. Oct 20, 2019 · PDF | On Oct 20, 2019, Rasha Adnan ahmed published Flexible Budgets | Find, read and cite all the research you need on ResearchGate The document outlines the differences between static and flexible budgets, providing examples of each and explaining how to compute variances. It explains how to calculate variable and fixed overhead variances, including the flexible budget variance, spending variance, efficiency variance, and production volume variance. Chapter 7 Flexible Budgets, Variances and Management Control: I Static and Flexible Budgets Static budget a budget based on a single level of output Flexible budget a budget which is adjusted for the actual level of output, revenue, or cost driver Standard cost a carefully predetermined amount representing what management thinks a cost should be Examples Standard quantity of materials = 2 kg To account for actual sales and expenses differing from budgeted sales and expenses, companies will often create flexible budgets to allow budgets to fluctuate with future demand. Explain similarities and differences in the planning of variable overhead costs and the planning of fixed overhead costs Identify the key features of a standard costing system This chapter discusses flexible budgets and overhead cost variances. Direct Labor Variances Cheerful Colors uses a similar approach to analyze the direct labor flexible budget variance. Compute the sales volume variance and the variable cost volume variances based on a comparison between the master budget and the flexible budget. Webb Co. Exhibit 23-5, the flexible budget performance report, showed several substantial flexible budget variances, including a $13,000 unfavorable variance for direct materials and a $10,400 favorable variance for direct labor. ★★★★★ 375 views • 28 slides Dec 1, 2024 · Larry's Flexible Budget Compared with the Planning Budget Activity Variances - Part 4 Activity and revenue increase by 10 percent, but net operating income increases by more than 10 percent due to the presence of fixed costs. Flexible Budgets. LO4 Prepare a performance report that combines activity variances and revenue and spending variances. Dec 25, 2020 · PDF | Prof. Step 1: Determine budgeted selling price, variable cost per unit, and budgeted fixed cost. Jan 6, 2025 · Learn to analyze flexible budgets and overhead variances to evaluate managerial performance effectively in this informative chapter. Oct 23, 2014 · Flexible Budgets, Variances,and Management Control: I Chapter 7 Distinguish a static budget from a flexible budget. Chapter 8. Oct 26, 2014 · 17. Many organizations have developed such rules of thumb as “investigate all variances exceeding $5,000 or 25% of expected cost, whichever is lower”. Read more! Jul 31, 2023 · • Summarize the results of the flexible budget variances computations based on the comparison between the flexible budget and the actual results. • Compute the sales volume variance and the variable cost volume variances based on a comparison between the master budget and the flexible budget. • Compute flexible budget variances by comparing the flexible budget with the actual results . Correct significant problems to enhance operations. 00 per pound 70,000 Standard Direct-Labor Cost Static and Flexible Budgets. Flexible Budgets/Variances II. This document discusses flexible budgets. Most companies use flexible budgets to control overhead costs. Learning Objectives. Flexible budget variances are the discrepancies between the planning budget, flexible budget, and actual operating results. Cost Variances Cost in flexible budget is the right benchmark Activity volume is the same in the flexible budget and In this post, we have discussed the Flexible Budget? Its Meaning, Methods, Fixed v/s Flexible Budget, Advantages, Disadvantages with Example. higher sales result in higher COGS • Actual results also include spending Apr 27, 2014 · This makes a flexible budget a powerful performance evaluation tool. Based on only one activity level. Step 1 : Choose the time period used to compute the budget. Explore revenue, spending variances, costing examples, labor variances, and variance models. The purpose for creating a Flexible Budget is for analysis and evaluation. Aug 19, 2012 · Flexible Budgets and Performance Analysis. Prepare a flexible budget. It defines variable and fixed overhead, and explains how to calculate variances for both including flexible budget variances, spending variances, efficiency variances, and production volume variances. It details the steps for developing a flexible budget and analyzing variances, including price and efficiency variances for direct costs. This identifies variances in variable costs due to differences in activity levels versus poor cost control. - Download as a PPT, PDF or view online for free Apr 13, 2012 · Chapter 7: Flexible Budgets, Variances, and Management Control: I The use of Planning for Control Basic Concepts • Variance – difference between an actual and an expected (budgeted) amount • Management by Exception – the practice of focusing attention on areas not operating as expected (budgeted) • Static budget – a budget prepared for only one level of activity • It is based on LO3 Prepare a report showing revenue and spending variances. Slide 1 1 Chapter 7: Flexible Budgets, Variances, and Management Control: I The use of Planning for Control Slide 2 2 Basic Concepts Variance – difference between an actual… Oct 8, 2024 · Gain deeper financial insights with flexible budget analysis, focusing on variances and performance metrics to optimize decision-making. Chapter Eight. Explore Larry’s Lawn Service case study to understand the benefits of flexible budgets in budget planning. manufactures and sells Apr 7, 2019 · The Flexible Budget: Factory Overhead. It demonstrates how to calculate activity variances by comparing a flexible budget to an Mar 28, 2025 · Learn about a flexible budget variance by understanding the definition, steps of creation and calculation, and a specific example to show how variance works. Level 1 (Horngren terminology). • Reason why individuals could interested in Jun 23, 2025 · Learn how to create a flexible budget for effective financial planning. Create a 6- to 8-slide presentation for the budget committee meeting. All actual results are compared with the original budgeted amounts, even if sales volume is more or less than originally planned. A flexible budget flexes the static budget for each anticipated level of production. Use May 27, 2024 · Learn about flexible budget variance, its components, calculation methods, and practical applications for better financial management. B: Calculate the variances. First, uses of budgets are outlined, then an opportunity for students to calculate their own is given. Actual$217,000. This lesson focuses on flexed budgets, standard costing and variances. Hmm! Comparing static planning budgets with actual costs is like comparing apples and oranges. Flexible budget variances are simply the differences between line items on actual financial statements with those on flexed budgets. All actual results are compared with theoriginal budgeted amounts, even if salesvolume is more or less than originally planned. Whereas the master budget is a fixed point, the flexible budget is a sliding scale that recalculates the period after close to establish spend levels based on actual sales. Developing Budgeted Variable Overhead Allocation Rates. Gain insights to adapt to changes and improve financial control. Unfavorable variances arise when actual results fall below budgeted. A flexible budget is not based on only one level of activity but is valid for the firm’s relevant range of activity. Exhibit 23-10 summarizes the flexible budget variances for the production costs. Title: Flexible Budgets and Variance Analysis 1 Introduction to Management Accounting 2 Introduction to Management Accounting Chapter 8 Flexible Budgets and Variance Analysis 3 Favorable and Unfavorable Variances Favorable variances arise when actual results exceed budgeted. Flexible budget variances may be used to determine any shortcomings in actual performance during a given period. Jun 5, 2025 · This video covers Chapter 7 of the Third-Year Cost Accounting course at the Faculty of Commerce, English Section (FCES), Cairo University. Static Budget Variance vs. The Flexible Budget Advantage A flexible budget solves this by adjusting costs and revenues based on the actual activity level. Learn to compute variances and allocate rates efficiently in a standard-costing system. It introduces flexible budgets which allow "apples to apples" comparisons of actual costs to expected costs based on actual activity levels, rather than to static planned budgets. Jun 20, 2025 · Variances may simply reflect changes in activity, not managerial effectiveness. In the year 2004, 10,000 suits were produced and sold. The document also mentions the Flexible-Budget-Based Variance Analysis Columnar Presentation of Variance Analysis (Direct Costs) Mar 27, 2019 · Flexible Budgets and Variances. Jun 8, 2012 · Overhead Budgets. 2) Flexible budgets are based on an activity driver Apr 14, 2025 · See how flexible budget variance tracks actual vs. version from ACC 312 at University of Texas. Static Budgets. Includes several possible activity levels. Step 2: Select the cost-allocation base. • Compute the sales volume variance and the variable cost volume variances based on a comparison between the master budget and the flexible budget . Aug 1, 2012 · Sales Variances. To compare actual sales and expenses to budget, actual volumes at the standard costs or allowances is calculated. . It defines a flexible budget as a budget that changes based on different output levels to recognize varying cost behavior patterns. Session 8. Overhead Costs. 20 Variances from Material and Labor Standards Flexible Budget or Total Standard Cost Allowed Units of good output achieved Input allowed per unit of output Standard unit price of input 21 Variances from Material and Labor Standards Standard Direct-Materials Cost Allowed 7,000 units X 5 pounds X 2. Explore causes of variances and ways to assess effectiveness and efficiency in financial management. Q2 : What is a master budget and how is it prepared?. Flexible Budgets, Overhead Cost Management, and Activity-Based Budgeting. Q1 : What are the relationships among budgets, long-term strategies, and short-term operating plans?. This document discusses flexible budgets, standard cost systems, and variance analysis. Oct 12, 2014 · Flexible Budgets and Performance Analysis. This document summarizes key concepts around flexible budgets, overhead cost management, and activity-based budgeting from chapter 17: 1) A flexible budget accounts for a range of activity levels rather than a single planned level like a static budget. Compute flexible budget variances by comparing the flexible budget with the actual results. Mr. Flexible Budget Variances Actual Results Flexible Budget Activity-Level Variances Flexible Budget Master Budget Effectiveness is the degree to which a goal, objective, or target is met. Planning budgets are prepared for a single, planned level of activity. Flexible Budgets A flexible budget is one based on different volumes of sales. Preview text Chapter 8 Flexible Budgets, Standard Costs, and Variance Analysis The Variance Analysis Cycle The variance analysis cycle is used companies to compare budgets to actual results for the purposes of solving problems and evaluating performance. Improve performance evaluation. The chapter focuses on Flexible Budgeting, Direct Cost View Static budget variances PowerPoint (PPT) presentations online in SlideServe. Learning Objective 1 Static and Flexible Budgets Planned level of output at start of the budget period Based on Static Budget Budgeted revenues and cost based on actual level of output Based on Flexible Budget Static Budget Example Assume that Pasadena Co. Overhead costs can range from 10% to 50% or more of a firm’s total product cost High OH results from increased automation, product complexity, product diversity, etc. It highlights the advantages of flexible budgets over static budgets, emphasizing their adaptability to varying production and sales levels, and their effectiveness in cost control. When should variances be investigated? Knowing exactly when to investigate is difficult. It allows comparison of actual costs to budgeted costs at the actual level of activity. LO6 Understand common errors made in preparing performance reports based on budgets and actual results. Learning objectives. Use standard costs to account for operations and managers’ performance. Times New Roman Monotype Sorts BlankHO Direct Input Variances, and Management Control: I Overview Standard = Budget Variances Static and Flexible Budgets Example Useful Format to Calculate DM and DL Variances Price Variance: material Price Variance: labor Efficiency Variance: DM Efficiency Variance: labor Example: calculate variances Calculation of Variances Performance Measurement Using Advantages of Flexible Budgets Show revenues and expensesthat should have occurred at theactual level of activity. 8 power point alt. Budgeted selling price is $155, variable cost is $115 per suit, and the budgeted fixed cost is $286,000. Favorable (F) versus Unfavorable (U) Variances Flexible Budgets, Variances, and Management Control: IFlexible Budgets, Variances, Learning Objective 1 Static and Flexible Budgets Static Budget Example and sells dress Chapter 10: Static and Flexible Budgets. Flexible Budget Performance Report CheeseCo Cost Formula per Hour Total Fixed Cost Machine hours Variable costs Indirect labor Indirect Flexible Budget STUDENT'S NAME INSTITUTIONAL AFFILIATION COURSE CODE AND TITLE PROFESSOR DUE Outline • Summary-sales and variable cost volume variances computations ;master budget and the flexible budget. Emphasis should be on highlighting problems, finding their root causes, and then taking corrective action, rather than seeking to assign Prepare a flexible budget. To save time, the focus should be on variances that are well above or below expectations. expected costs, plus how to calculate it without complex formulas or wasted time. Actuals are then compared to the flexible budget which results in variances. A 4-variance analysis presents spending and efficiency variances for variable overhead costs and spending and production-volume variances for fixed overhead costs. nassif jasim aljboory Albayan university Static(or Planning or fixed or master) Budgets :-Static budget is one that is based on one | Find, read and cite all the research you Aug 8, 2014 · Variances. CHAPTER 7 Flexible Budgets, Direct-Cost Variances, and Management Control Static Budgets and Performance Reports CheeseCo Static Budgets and Performance Reports CheeseCo U = Unfavorable variance CheeseCo was unable to achieve the budgeted level of activity. Students should then flex a budget and examples of how to use flexed figures to calculate sales, direct materials, direct lab Jan 5, 2020 · Flexible Budgets, Variances, and Management Control: II. Jul 3, 2024 · Flexible Budget Variance Identical in format to the master budget, flexible budgets are prepared using various (any) levels of sales volume. Dr. Compute flexible budget variances by comparing the flexible budget with the actual results. The document discusses flexible budgets, which adjust for changes in activity volume and facilitate performance measurement by comparing actual versus budgeted performance. LO5 Prepare a flexible budget with more than one cost driver. Snow was extremely upset with the budget deficit. uses a twelve-month budget period. Step 2: Determine the actual quantity of output. Identifying Problems and Opportunities. Variance Analysis Cycle. It contains 6 learning objectives: 1) Prepare flexible budgets and variance analysis, 2) Identify benefits of standard costs and how standards are set, 3) Compute direct materials and labor variances, 4) Compute manufacturing overhead variances, 5) Describe relationships between variances and responsibility Flexible-Budget-Based Variance Analysis Columnar Presentation of Variance Analysis (Direct Costs) Summary of Levels 1, 2, and 3 Variance Analysis Title: Flexible Budgets, Variances, and Management Control: I 1 Flexible Budgets, Variances, and Management Control I Chapter 7 2 Introduction Flexible budgets and variances help managers gain insights into why the actual results differ from the planned performance. Oct 30, 2013 · Flexible Budgets andPerformance Analysis Chapter 9 October 30, 2013 Why is a flexible budget needed • The planning budget is basically valid for the level of activity in the original plan/budget • The actual level of activity is always different than the plan • Activity variances are normal/expected, i. Variance information useful to the Sales Force ACCT 7310, Spring 2014. The variances of actual res Jan 6, 2025 · Explore the planning of variable and fixed overhead costs. It also shows Jan 1, 2021 · PDF | On Jan 1, 2021, Nagham Fouad Allamy published FLEXIBLE BUDGETS, DIRECT-COST VARIANCES, AND MANAGEMENT CONTROL | Find, read and cite all the research you need on ResearchGate Prepare a flexible budget. View Notes - Ch. The flexible budget variance for direct labor is $10,400 favorable, as shown in Exhibit 23-10. • Since this is a not-for-profit organization, address why anyone should be concerned with meeting the budget. This document provides an overview of flexible budgets and performance analysis. May 1, 2012 · Flexible Budgets, Variances, and Management Control: II. This means variable costs increase or decrease as activity changes, while fixed costs remain constant (within the relevant range). Flexible Budgets, Variances, and Management Control: II Chapter 8 – A free PowerPoint PPT presentation (displayed as an HTML5 slide show) on PowerShow. Flexible Budget Formulas To develop a flexible budget, managers determine revenue and cost behavior (within the relevant range) with respect to cost drivers. Q3 : What are budget variances and how are they calculated?. Flexible Overhead Budget. Mar 8, 2012 · Flexible Budgets, Variances, and Management Control: I Session 7 Learning Objectives • Describe the difference between a static budget and a flexible budget • Develop a flexible budget and compute flexible-budget variances and sales-volume variances • Explain why standard costs are often used in variance analysis • Compute the price and efficiency variances for direct cost categories Nov 11, 2017 · Selling-price variance $50,000 F Actual variable costs exceeded flexible budget variable costs 50,000 U Actual fixed costs exceeded flexible budget fixed costs 14,000 U Total flexible-budget variance $14,000 U Sales-Volume Variance (Level 2) in (000) Flexible Static Sales-Volume Budget Budget Variance Suits 10 13 3 U Revenue $1,550 $2,015 $465 The document uses an example of a lawn care business to illustrate how a flexible budget accounts for actual activity being different than planned and allows for a more accurate analysis of variances. Master Budget Variance: Sales. odjqv pavqf apbkg ucusl zpce lmztr tzlydi ekg mgv tdx