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Lecture Accounting principles (12th Edition): Chapter 24 - Weygandt, Kimmel, Kieso

Chapter 24 - Budgetary control and responsibility accounting. In this chapter, the learning objectives are: Describe the concept of budgetary control, evaluate the usefulness of static budget reports, explain the development of flexible budgets and the usefulness of flexible budget reports. | Learning Objectives Describe budgetary control and static budget reports. 1 Prepare flexible budget reports. 2 Apply responsibility accounting to cost and profit centers. 3 Evaluate performance in investment centers. 4 Budgetary Control and Responsibility Accounting 24 The use of budgets in controlling operations is known as budgetary control. Takes place by means of budget reports which compare actual results with planned objectives. Provides management with feedback on operations. Budget reports can be prepared as frequently as needed. Management analyzes differences between actual and planned results and determines causes. LEARNING OBJECTIVE Describe budgetary control and static budget reports. 1 LO 1 Budgetary control involves the following activities. Illustration 24-1 Budgetary Control LO 1 Works best when a company has a formalized reporting system which: Identifies the name of the budget report. States the frequency of the report. Specifies the purpose of the report. Indicates the primary recipient(s) of the report. Budgetary Control LO 1 Partial budgetary control system for manufacturing company. Illustration 24-2 Budgetary Control LO 1 Budgetary control involves all but one of the following: Modifying future plans. Analyzing differences. Using static budgets. Determining differences between actual and planned results. Budgetary Control Question LO 1 A Static budget is a projection of budget data at one level of activity. When used in budgetary control, each budget included in the master budget is considered to be static. Ignores data for different levels of activity. Compares actual results with budget data at the activity level used in the master budget. Static Budget Reports LO 1 Illustration 24-3 Illustration: Budget and actual sales data for the Rightride product in the first and second quarters of 2017 are as follows. Static Budget Reports LO 1 Illustration: Sales budget report for Hayes Company’s first quarter. Illustration 24-3 Illustration 24-4 . | Learning Objectives Describe budgetary control and static budget reports. 1 Prepare flexible budget reports. 2 Apply responsibility accounting to cost and profit centers. 3 Evaluate performance in investment centers. 4 Budgetary Control and Responsibility Accounting 24 The use of budgets in controlling operations is known as budgetary control. Takes place by means of budget reports which compare actual results with planned objectives. Provides management with feedback on operations. Budget reports can be prepared as frequently as needed. Management analyzes differences between actual and planned results and determines causes. LEARNING OBJECTIVE Describe budgetary control and static budget reports. 1 LO 1 Budgetary control involves the following activities. Illustration 24-1 Budgetary Control LO 1 Works best when a company has a formalized reporting system which: Identifies the name of the budget report. States the frequency of the report. Specifies the purpose of the report. Indicates