COMM 305 Study Guide - Final Guide: Contribution Margin, Budget, Asset Turnover
4 Dec 2018
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Document Summary
Budget reports comparing actual results with planned objectives should be prepared weekly to be most effective. Cash budget reports are often prepared daily, whereas others are prepared less frequently depending on the activities being monitored. A static budget considers that actual activity is often different from the level of activity expected. Evaluating a manager"s performance in controlling variable costs is effectively achieved using a static budget. A flexible budget should be prepared for each of the types of budgets included in the master budget. A flexible budget report will compare actual costs with the budgeted costs at the actual activity level achieved. Policies regarding when a difference between actual and planned results should be investigated are generally more restrictive for controllable items than for non-controllable items. Cost centres are not classified as responsibility centres since there is no revenue responsibility. More costs become controllable as one moves up to each higher level of managerial responsibility.
