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PAGE 1368
?2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Fundamental Accounting Principles, 21st Edition
PAGE 1345
?2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Solutions Manual, Chapter 23
Chapter 23
Flexible Budgets and Standard Costs
QUESTIONS
1. Fixed budget performance reports have limited usefulness because they do not reflect differences in revenues and variable costs that can occur simply because actual volume is different from budgeted volume. This is a serious limitation when evaluating (benchmarking) the reasonableness of actual revenues and costs.
2. The primary purpose of a flexible budget is to help managers better evaluate past performance, which can improve their abilities to monitor and control operations.
3. The proper title is: Spalding Company Flexible Budget Performance Report For Year Ended December 31, 2013
The proper title communicates to the user the focus of the report. Although it may seem obvious, many reports used in the business world do not have a proper or descriptive title. The sooner a student begins to make this a routine task in completing assignments, the better skilled s/he will be for the business world.
4. A flexible budget performance report is useful for an analysis of the difference between actual performance and budgeted performance—often called variance analysis. Its usefulness stems from the fact that both the budgeted and actual results are based on the same level of activity.
5. A variable cost implies a constant per unit
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