Which of the following are common errors in preparing performance reports?

-One of the common errors in preparing performance reports is to implicitly assume that all costs are fixed. -Comparing static planning budget costs to actual costs only makes sense if the cost is variable. -One of the common errors in preparing performance reports is to implicitly assume that all costs are variable.

When a static planning budget is compared to actual results at a different activity level?

Which of the following is an estimate of what revenues and costs should have been given the actual level of activity for the period?

How much input should be used to produce a product or provide a service is a n standard?

What the revenue should have been the variance is labeled favorable?

How do you prepare a flexible budget performance report?

To prepare a flexible budget performance report, you identify key figures based on the flexible budget formula. If your company’s formula says, for example, that COGS should be 25 percent of sales and sales were $75,000 for the period, COGS should be $18,750.

How do you calculate profit in a flexible budget?

To do this, multiply the total production output by the variable cost of each unit produced. For example, if the total production output is 1,000 products and the variable cost for each unit is $25, the total variable cost is $25,000. You can also calculate average variable costs that are not related to production.

How do you change a static budget to a flexible budget?

What effect if any would you expect poor quality materials to have on direct labor variances?

What effect, if any, would you expect poor-quality materials to have on direct labor variances? If poor quality materials create production problems, a result could be excessive labor time and therefore an unfavorable labor efficiency variance.

How do you find the unit material cost?

Here is the formula broken down: Cost per unit = (Electricity + Rent + Labor + Raw materials) / Number of units.

What is static budgeting?

A static budget is a budget that uses predicted amounts for a given period prior to the period beginning. The unique aspect of a static budget is that it does not change regardless of deviations in revenue and expenses.

How do you create a static budget?

To calculate a static budget variance, simply subtract the actual spend from the planned budget for each line item over the given time period. Divide by the original budget to calculate the percentage variance.

How do you prepare a production budget in accounting?

What is activity variance?

Activity variances are the differences between the static/planning budget and the flexible budget and are caused by the difference between planned and actual activity levels.

How do you find the direct labor efficiency variance?

The formula for this variance is:(standard hours allowed for production – actual hours taken) × standard rate per direct labour hour. (standard hours allowed for production – actual hours taken) × standard rate per direct labour hour.

What are the ways of disposing cost variance?

Another method is to carry forward the variances to the next financial year by crediting the same to a reserve account to be set off in the subsequent year or years. The favorable and adverse variances may cancel each other in the course of reasonable time and thus be disposed-off.

How do I figure out gross profit?

The gross profit formula is: Gross Profit = Revenue – Cost of Goods Sold.

How is margin of safety calculated?

In accounting, the margin of safety is calculated by subtracting the break-even point amount from the actual or budgeted sales and then dividing by sales; the result is expressed as a percentage.

How do you prepare a direct materials budget?

To work this out in units, just apply another simple formula: Budgeted production level during the period x. Units of direct material required per unit = Direct material in units necessary for production.

What are flexible budgets?

A flexible budget adjusts based on changes in actual revenue or other activities. The result is a budget that is fairly closely aligned with actual results. This approach varies from the more common static budget, which contains nothing but fixed expense amounts that do not vary with actual revenue levels.