Budgetary Control and Responsibility Accounting参考.pptx

;Learning Objectives;The use of budgets in controlling operations is known as budgetary control. Takes place by means of budget reports which compare actual results with planned objectives. Provides management with feedback on operations. Budget reports can be prepared as frequently as needed. Management analyzes differences between actual and planned results and determines causes.;Budgetary control involves the following activities.;Works best when a company has a formalized reporting system which: Identifies the name of the budget report. States the frequency of the report. Specifies the purpose of the report. Indicates the primary recipient(s) of the report.;Partial budgetary control system for manufacturing company.;Budgetary control involves all but one of the following: Modifying future plans. Analyzing differences. Using static budgets. Determining differences between actual and planned results. ;A Static budget is a projection of budget data at one level of activity. When used in budgetary control, each budget included in the master budget is considered to be static. Ignores data for different levels of activity. Compares actual results with budget data at the activity level used in the master budget.;Illustration 24-3;Illustration: Sales budget report for Hayes Company’s first quarter. ;Illustration: Budget report for the second quarter contains one new feature: cumulative year-to-date information.;Appropriate for evaluating a manager’s effectiveness in controlling costs when: Actual level of activity closely approximates master budget activity level, and/or Behavior of costs is fixed in response to changes in activity. Appropriate for fixed costs. Not appropriate for variable costs.;A static budget is useful in controlling costs when cost behavior is: Mixed. Fixed. Variable. Linear. ;Lawler Company expects to produce 5,000 units of product CV93 during the current month.