Flexible budgets, variances and Mgt. control

7 important questions on Flexible budgets, variances and Mgt. control

Favourable variance (F)

A variance that increases operating income, relative to the budgeted amount.

Unfavourable variance (U)

A variance that decreases operating income relative to the budgeted amount.

Oorzaken Prijs- en Efficiencyverschillen

Prijsverschillen

1. Onderhandelingsresultaat
2. Inkoopvolume
3. Marktomstandigheden
4. Onvoldoendeinzicht in de markt

Efficiencyverschillen

1. Ervaringpersoneel
2. Planning
3. Onvoldoende inzicht in condities en ervaring
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How to determine input (prices and quantities)

1. Actual input from past periods
2. Standards developed by the company

Advantages to a budget based on standard amounts

1. They can exclude past inefficiencies
2. They can take into account expected changes in the budget period.

Interpreting Price and Efficiency variances

The cause of price and efficiency variances can be interrelated. Therefore, do not interpret these variances in isolation from each other.

Continuous improvement budgeted cost

Budgeted cost that is successively reduced over succeeding time periods.

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