BU247 Lecture Notes - Lecture 9: Income Statement
Document Summary
Question (craig"s manufacturing: complete the static budget (looks like an income statement based on planned and standard, complete the actual budget (income statement based on actual, compute the first level (static budget) variance. Static budget variance = actual budget income vs static budget income static budget variance = - Static budget variance = - (u = unfavourable) Construct the volume effect and standard effect by building the flexible budget: complete the flexible budget (replicate the static budget planning and standard but use the actual level of sales instead of planned) Is the income the organization should have ended up with at the end of the period with its actual level of sales, had they maintained everything else standard: compute the second level variances. Planning variance = flexible budget income static budget income (stan unit cm x change sales vol) Flexible budget variance = actual income flexible budget income.
