Professional Documents
Culture Documents
Performance Analysis
Chapter 9
PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA
Charles W. Caldwell, D.B.A., CMA
Jon A. Booker, Ph.D., CPA, CIA
Cynthia J. Rooney, Ph.D., CPA
Copyright2015byMcGrawHillEducation.Allrightsreserved.
9-2
9-3
Learning Objective 1
Prepare a flexible
budget.
9-4
Hmm! Comparing
static planning budgets
with actual costs
is like comparing
apples and oranges.
9-5
9-6
Larrys Budget
9-7
9-8
9-9
9-10
9-11
9-12
9-13
To
To answer
answer the
the question,
question,
we
we must
must
the
the budget
budget to
to the
the
actual
actual level
level of
of activity.
activity.
9-14
le
b
ria
a
V
Fixed
9-15
9-16
9-17
Quick Check
What
What should
should the
the total
total wages
wages and
and salaries
salaries cost
cost
be
be in
in aa flexible
flexible budget
budget for
for 600
600 lawns?
lawns?
a.
a. $18,000.
$18,000.
b.
b. $20,000.
$20,000.
c.
c. $23,000.
$23,000.
d.
d. $25,000.
$25,000.
9-18
Quick Check
What
be
total
total
wages
wages
and
salaries
salaries
cost
What should
should the
be the
the
the
total
total
wages
wages
andand
and
salaries
salaries
cost
cost
be
in
aaaflexible
flexible
budget
budget
for
for
600
600
lawns?
lawns?
cost
be
inin
in
aflexible
flexible
budget
budget
for
for
600
600
lawns?
lawns?
a.
$18,000
a. $18,000.
$18,000
$18,000.
b.
b. $20,000.
$20,000.
c.
c. $23,000.
$23,000.
d.
d. $25,000.
$25,000.
Total wages and salaries cost
= $5,000 + ($30 per lawn 600 lawns)
$5,000 + $18,000 = $23,000
9-19
Learning Objective 2
Prepare a report
showing activity
variances.
9-20
Activity Variances
Flexible
budget revenues
and expenses
Planning
budget revenues
and expenses
9-21
Activity Variances
Lets use
budgeting
9-22
Activity Variances
Larrys Flexible Budget Compared with the Planning Budget
9-23
Activity Variances
Larrys Flexible Budget Compared with the Planning Budget
Activity and revenue increase by 10 percent, but net operating income
increases by more than 10 percent due to the presence of fixed costs.
9-24
Learning Objective 3
Prepare a report
showing revenue and
spending variances.
9-25
Actual cost
9-26
budgeting
9-27
9-28
9-29
Learning Objective 4
Prepare a performance
report that combines
activity variances and
revenue and spending
variances.
9-30
budgeting
9-31
9-32
50
50 lawns
lawns $30
$30 per
per lawn
lawn
50
50 lawns
lawns $75
$75 per
per lawn
lawn
9-33
$43,000
$43,000 actual
actual -- $41,250
$41,250 budget
budget
9-34
Donations
Endowments
Universities
9-35
9-36
Learning Objective 5
Prepare a flexible budget
with more than one cost
driver.
9-37
9-38
9-39
9-40
Learning Objective 6
Understand common
errors made in preparing
performance reports
based on budgets and
actual results.
9-41
9-42
9-43
9-44
End of Chapter 9