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Classified in Economy
Written at on English with a size of 2.27 KB.
Benefits of budgeting:
·Forces managers to look into the future
·Important communication role within organization
·Motivates and rewards employees (benchmark)
Participative budgeting: allows employees to have input into Budget-process
Budgeted production units = budgeted unit sales + budgeted Ending finished goods inventory – budgeted beginning finished goods inventory
Budgeted raw materials purchases = raw materials needed for Production + budgeted ending raw materials inventory – budgeted beginning raw Materials inventory
Ending cash balance = beginning cash balance + budgeted cash Receipts – budgeted cash payments +/- cash borrowed or repaid
Budgeted merchandise purchases = budgeted sales + budgeted Ending merchandise inventory – budgeted beginning merchandise inventory
Price Variance = (AQ x SP) – (AQ x AP)
Price variance = AQ x (SP-AP)
Quantity Variance = (SQ x SP) – (AQ x SP)
Quantity Variance = SP x (SQ – AQ)
Direct materials price variance = AQ x (SP – AP)
Direct materials quantity variance = SP x (SQ – AQ)
Direct labor Rate Variance = AH x (SR – AR)
Direct labor efficiency variance = SR x (SH – AH)
Variable overhead rate variance = AH x (SR – AR)
Variable overhead efficiency variance = SR x (SH – AH)
Fixed overhead spending variance = Budgeted fixed overhead – Actual fixed overhead
Fixed overhead rate (FOH) = total fixed overhead Costs/master budget planned production
Fixed overhead volume variance = (FOH Rate x AV) – (FOH Rate X Budgeted Volume)
FOH Rate x (AV – Budgeted Volume)
Expected capacity variance = FOH Rate x (Budgeted Volume – Practical Capacity)
Unexpected Capacity Variance = FOH Rate x (AV – Budgeted Volume)