Tài chính kế toán - Chapter 7: Flexible budgets

Chapter 7Flexible budgets1Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldFlexible budgetsStatic budget: prepared for one level of planned activity.Flexible budget: covers a range of activity within a business.Fixed costs: in total remain constant in the short run within a given range of activity.Variable costs: in total vary as the level of activity changes.2Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldCost behavior:The more knowledge of cost behavior, the more accurate the budgeting process.Fixed costs: in total remain constant in the short run within a given range of activity.Variable costs: in total vary as the level of activity changes.Semi-variable costs: have a fixed and a variable component.3Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldFlexible budget equation4Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldStatement of financial performance (applying cost behavior principles) (p. 159)Anshar Manufacturing $$$Sales   Less variable costs                       Contribution margin   Less fixed costs               Net profit    Anshar Manufacturing 5Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldFlexible budget analysisActivity volume variance: shows what portion of the variance was due to the actual volume being different from the desired volume as per master budget.Volume levels may be based on: Number of units soldProfessional hoursMachine hoursStudent contact hoursFlexible budget variance: shows the variance when the actual volume achieved is used to recalculate the budget figures (refer p. 163)6Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya AronfeldSummaryStatic budget variance:Difference between actual results and master budget figures.Activity volume variance:Difference between master budget figures and budgeted figures recalculated for actual volume achieved.Flexible budget variance:Difference between actual results and budgeted figures recalculated for actual volume achieved.7Copyright  2003 McGraw-Hill Australia Pty LtdPPTs t/a Budgeting, second edition, by Banks & GilibertiSlides prepared by Mya Aronfeld