Numerical question ch 22 Show
A company has two departments, Y and Z that incur delivery expenses. An analysis of the total delivery expense of $9,000 indicates that Dept. Y had a direct expense of $1,000 for deliveries and Dept. Z had no direct expense. The indirect expenses are $8,000. The analysis also indicates that 40% of regular delivery requests originate in Dept. Y and 60% originate in Dept. Z. Departmental delivery expenses for Dept. Y and Dept. Z, respectively, are :A)
$4,500; $4,500. What is a Flexible Budget Performance Report?A flexible budget performance report is used to compare actual results for a period to the budgeted results generated by a flexible budget. This report varies from a traditional budget versus actual report, in that the actual sales figure is plugged into the budget model, which then uses formulas to alter the budgeted expense amounts. This approach results in budgeted expenses that are significantly more relevant to the actual performance that an organization experiences. If the flexible budget model is designed to adjust to actual sales inputs in a reasonable manner, then the resulting performance report should closely align with actual expenses. This makes it easier to spot anomalies in the report, which should be rare. Management can then focus on the significant variances to see if any actions should be taken to ensure that actual results remain close to expectations. The flexible budget model and its related reports are a significant improvement over the more common static model, where there is only one version of a budget, and that budget does not change. When a static model is the basis of comparison, the likely outcome is large favorable variances or unfavorable variances for many line items, since the static model may have been based on a sales level that is no longer relevant to actual conditions. Example of a Flexible Budget Performance ReportABC International has adopted a flexible budget model, in which the cost of goods sold should be 25% of sales. In the most recent period, actual sales were $1,000,000. When this figure is input into the model, it generates a budgeted cost of goods sold of $250,000. The actual cost of goods sold was $260,000. This information is inserted into the accounting department's flexible budget performance report, where the cost of goods sold line item shows a $10,000 unfavorable variance. The following solution is suggested to handle the subject “A flexible budget performance report compares the differences between: Help Save & Exit Actual performance and…“. Let’s keep an eye on the content below! A flexible budget
performance report compares the differences between: Help Save & Exit Actual performance and budgeted performance based on actual sales volume. Actual performance over several periods Budgeted performance over several periods Actual performance and budgeted performance based on budgeted sales volume Actual performance and standard costs at the budgeted sales volume We were unable to transcribe this image $29,000 unfavorable $29,000 favorable $22,500 unfavorable. $52.500
favorable. $52,500 unfavorable Identify the situation below that will result in a favorable variance Actual revenue is higher than budgeted revenue. Actual revenue is lower than budgeted revenue. Actual income is lower than expected income Actual costs are higher than budgeted costs. Actual expenses are higher then budgeted expenses. 1. Based on actual sales volume, the difference between actual and budgeted performance 2. Variation in direct labor
efficiency = (standard hours – actualhrs)*standard rate = (47000-45000)*14.50 = $29000 Favorable 3. Actual revenue is greater than budgeted revenue ConclusionAbove is the solution for “A flexible budget performance report compares the differences between: Help Save & Exit Actual performance and…“. We hope that you find a good answer and gain the knowledge about this topic of business. What does a flexible budget performance report do that a simple comparison of budgeted to actual results does not do? The differences between the actual results and the flexible budget are the revenue and spending variances. Definition: A flexible budget performance report is a management report that compares the actual revenues and costs for a period with the budgeted revenues and costs based on the actual sales volume. What is the difference between a flexible budget and an actual budget?Variances or differences in the actual budget give a small business important information about performance elements such as overhead costs and profit. A flexible budget is a kind of budget that can easily change input variables over time. It forecast revenues and expenses with a variety of activity levels. What does a flexible budget tell you?A flexible budget is one based on different volumes of sales. A flexible budget flexes the static budget for each anticipated level of production. This flexibility allows management to estimate what the budgeted numbers would look like at various levels of sales. What is the purpose of budget performance reports?The Profit & Loss by Budget Performance Report lines up your forecasted budget alongside your actual numbers over a specific financial period. This allows you to easily see what ‘budget items’ went as expected, which outperformed expectations, and which did not meet expectations. What is a flexible report?Flexible reporting changes the way that you can create and use your ad hoc reports. It is designed to increase the speed of creating custom reports and allow the flexibility of making immediate changes to the report easier than having to make a new or edit a previous ad hoc report using the standard method. What are flexible budgets and how are they used for performance analysis?A flexible budget performance report combines activity variances and revenue and spending variances on one report. Common errors in comparing actual costs to budgeted costs are to assume all costs are fixed or to assume all costs are variable. Why is it more useful to compare actual financial results to a flexible budget instead of to a master budget?The greatest advantage that a flexible budget has over a static budget is its adaptability. In the real world, change is real and it is constant. A flexible budget can handle that reality and better position a company for the challenges of the marketplace. Fixed versus variable expenses in a flexible and static budget. Why does a flexible budget report provide a better basis for evaluating performance than the report based on static budget data?A flexible budget allows a business to see more variances than a static budget. Making a static budget involves the use of assumptions and predictions about sales, the market, economic conditions and other factors that impact a business before the budget period begins; these assumptions might not be correct. What do you understand by flexible budget how does it differ from a fixed budget explain its utility to a business Organisation?Key Differences Between Fixed and Flexible Budget How do you do a flexible budget performance report?To prepare a flexible budget performance report, you identify key figures based on the flexible budget formula. If your company’s formula says, for example, that COGS should be 25 percent of sales and sales were $75,000 for the period, COGS should be $18,750. Which of the following may appear on a flexible budget performance report?Transcribed Image Text:Which of the following may appear on a flexible budget performance report? Multiple Choice An unfavorable spending variance. An unfavorable activity variance. All of the above may appear on a flexible budget performance report. Why is flexible budgeting important?Flexible, rolling budgets empower entrepreneurs to cope with change. This nimble planning process lets you adjust spending throughout the year; benefits include less overspending, more opportunities and speedier responses to changing market and business conditions. How is the preparation of a flexible budget performance report important?As a planning tool, flexible budgets are prepared to enable a firm to quantify expected results at different activity levels. As a control tool, flexible budgets are used to evaluate actual results by restating the original static budget figures to the actual level of activity achieved. What is a flexible budget variance report?A flexible budget variance is any difference between the results generated by a flexible budget model and actual results. If actual revenues are inserted into a flexible budget model, this means that any variance will arise between budgeted and actual expenses, not revenues. Can we use flexible budget as performance measurement?Performance Measurement What is the advantage of using flexible budget to evaluate the firm’s performance as opposed to static budget explain?The greatest advantage that a flexible budget has over a static budget is its adaptability. In the real world, change is real and it is constant. A flexible budget can handle that reality and better position a company for the challenges of the marketplace. Fixed versus variable expenses in a flexible and static budget. Why is the flexible budget a better way to measure performance than the static budget?A flex budget uses percentages of revenue or expenses, instead of fixed numbers like a static budget. This approach means you’ll easily be able to make changes in the budgeted expenses that are directly tied to your actual revenue. Why flexible budget variances are usually better indicators of performance than static budget variances?Flexible-budget variances are a better measure of sales price and cost performance than static-budget variances because they compare actual revenues to budgeted revenues and actual costs to budgeted costs for the same output. Which of the following may appear on a flexible budget performance report?Transcribed Image Text:Which of the following may appear on a flexible budget performance report? Multiple Choice An unfavorable spending variance. An unfavorable activity variance. All of the above may appear on a flexible budget performance report. Can we use flexible budget as performance measurement?Performance Measurement Why a flexible budget can improve performance evaluations?The flexible budget responds to changes in activity, and may provide a better tool for performance evaluation. It is driven by the expected cost behavior. Fixed factory overhead is the same no matter the activity level, and variable costs are a direct function of observed activity. What is a flexible budget variance report?A flexible budget variance is any difference between the results generated by a flexible budget model and actual results. If actual revenues are inserted into a flexible budget model, this means that any variance will arise between budgeted and actual expenses, not revenues. Why does a flexible budget report provide a better basis for evaluating performance than the report based on static budget data?A flexible budget allows a business to see more variances than a static budget. Making a static budget involves the use of assumptions and predictions about sales, the market, economic conditions and other factors that impact a business before the budget period begins; these assumptions might not be correct. How do you prepare a flexible budget performance report?To prepare a flexible budget performance report, you identify key figures based on the flexible budget formula. If your company’s formula says, for example, that COGS should be 25 percent of sales and sales were $75,000 for the period, COGS should be $18,750. What does a flexible budget compare?In a flexible budget, there is no comparison of budgeted to actual revenues, since the two numbers are the same. The model is designed to match actual expenses to expected expenses, not to compare revenue levels.
What is the purpose of budget performance reports?The Profit & Loss by Budget Performance Report lines up your forecasted budget alongside your actual numbers over a specific financial period. This allows you to easily see what 'budget items' went as expected, which outperformed expectations, and which did not meet expectations.
What is the use of flexible budget to analyze performance?A flexible budget provides estimates of what revenues and costs should be for any level of activity, within a specified range. When used for performance evaluation purposes, actual costs are compared to what the costs should have been for the actual level of activity during the period.
What are the two meanings of a flexible budget?What is a flexible budget? A flexible budget is a budget that adjusts to the activity or volume levels of a company. Unlike a static budget, which does not change from the amounts established when the budget was created, a flexible budget continuously "flexes" with a business's variations in costs.
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A flexible budget performance report compares the differences between
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