Accounting ACCT 2620 Lecture Notes - Lecture 6: Task Analysis, Financial Statement, Variable Cost
Document Summary
Budget: plan that specifies how resources will be acquired and used. Master budget: covers all areas of business: sales budget (must be accurate) Financial statements: income, balance sheet, cash flows. Capital budget: acquisition of long-term assets (ex. Financial budget: acquisition of financial resources (stock, issuing debt, loan, investors) Continuous/ rolling budget: constantly updated by adding new period and dropping off one just completed. Cost variance analysis: focuses on the difference between actual and standard. Price variance: holds quality constant, compares actual and standard price: material price, labor rate. Quantity variance: holds price constant, compares actual and standard quantity: material quantity, labor efficiency. Inappropriate for large customized orders/ large variety of products. Flexible budget: a detailed plan for controlling oh costs. Easy to compare budget and actual production. Static budget: prepared for only on level of activity (ex. Hard to compare budget and actual production. = (budgeted variable oh cost per unit)(total activity units)
