管理会计讲义chap010.pptVIP

* This raises an additional question, namely – How much of the cost variances is due to higher activity, and how much is due to cost control? To answer this question, we must “flex” the budget. * Flexing a budget involves two key assumptions about cost behavior. First, total variable costs change in direct proportion to changes in activity; and second, total fixed costs remain unchanged within a specified activity range. * Let’s continue the Larry’s Lawn Service example by preparing a flexible budget at the actual level of activity. * Larry’s flexible budget for an activity level of 550 lawns mowed is as shown on this slide. The key to preparing a flexible budget is to state each variable cost as a function of activity. For example, gasoline and supplies are equal to $9 per lawn, and the variable portion of wages and salaries is $30 per lawn. While variable costs are expressed per unit of activity, fixed costs are not. The fixed costs are not sensitive to changes in the activity level. Notice, the “Q” in all revenue and cost formulas is 550 lawns mowed. So, for example: Revenue of $41,250 is computed by multiplying $75 × 550. Wages and salaries of $21,500 is computed by multiplying $30 × 550 plus $5,000 in fixed salaries. Can you compute the flexible budget amount for wages and salaries at a different level of activity? The question on the following screen will ask you to do that. * Here’s the question. What should be the total wages and salaries cost in a flexible budget for 600 lawns? * Total wages and salaries is the sum of the $5,000 of fixed portion plus the $18,000 of variable portion. The variable portion is computed by multiplying $30 per lawn times 600 lawns. Learning objective number 2 is to prepare a report showing activity variances. * An activity variance arises solely due to the difference in the level of activity included in the planning budget and the actual level of activity?. * * Part of the discrepancy between the budgeted net op