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Principles of Accounting - Managerial > Chapter 9 - Flexible Budgets and Performance Analysis > Flashcards

Chapter 9 - Flexible Budgets and Performance Analysis Flashcards

1
Q

What are planning budgets used for?

A

A single planned level of activity

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2
Q

What are 2 advantages of planning budgets?

A
  1. Help managers control costs

2. Improve performance evaluation

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3
Q

What is the layout of the budgets?

A 
Number of units (quantity)
Revenues
Expenses
Total Expenses
Net Operating Income
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4
Q

What is the layout of the 3 rows in the variance?

A

Actual Budget
Planned Budget
Variances

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5
Q

What does F stand for?

A

Favorable Variances

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6
Q

What does U stand for?

A

Unfavorable Variances

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7
Q

What is the layout of the 3 rows in the activity variance?

A

Flexible Budget
Planned Budget
Activity Variances

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8
Q

What is the formula to find the variance?

A

Actual budget - Planned budget

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9
Q

What is the formula to find the activity variance?

A

Flexible budget - Planned budget

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10
Q

What is the layout of the 3 rows in the revenue and spending variance?

A

Actual Budget
Flexible Budget
Revenue and Spending Variances

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11
Q

What is the layout of the 5 rows in the performance report?

A 
Actual Budget
Revenue and Spending Variances
Flexible Budget
Activity Variances
Planned Budget
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12
Q

What is the formula to find the revenue and spending variance?

A

Actual budget - flexible budget

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13
Q

True or False:

Non-profit organization’s revenue may consist of both fixed and variable elements

A

True

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14
Q

What are performance reports often prepared for?

A

Cost centers

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15
Q

Does the planning budget use the expected quantity or the actual quantity?

A

The expected quantity

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16
Q

Does the flexible budget use the expected quantity or the actual quantity?

A

The actual quantity

17
Q

What is the Actual budget also known as?

A

The Income Statement

18
Q

What is the difference between the actual budget and the planned budget?

A

Variance

19
Q

What is the difference between the actual budget and the flexible budget?

A

Revenue and Spending Variance

20
Q

What is the difference between the flexible budget and the planned budget?

A

Activity Variance

21
Q

List 4 characteristics of flexible budgets

A
  1. It may be prepared for any activity level in the relevant range
  2. It show the incurred costs at the actual activity level
  3. It help managers control costs
  4. It improves performance evaluation
22
Q

What is a budget that is prepared at the beginning of the budgeting period that is valid only for the planned level of activity?

A

A planning budget

23
Q

What is a report showing estimates of what revenues and costs should have been, given the actual level of activity for the period?

A

A flexible budget

Principles of Accounting - Managerial (11 decks)

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