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Performance Analysis
Chapter 11
Learning Objective 1
Slide 2
Planning budgets
are prepared for
a single, planned
level of activity.
Performance
evaluation is difficult
when actual activity
differs from the
planned level of
activity.
McGraw-Hill Education (Asia)
McGraw-Hill/Irwin
Slide 3
Slide 4
Larrys Budget
McGraw-Hill Education (Asia)
McGraw-Hill/Irwin
Slide 5
Slide 6
Slide 7
Slide 8
Slide 9
Slide 10
Slide 11
Slide 12
To
Fixed
Slide 13
Lets prepare a
budget
for Larrys Lawn
Service.
Slide 14
Slide 15
Quick Check
What should the total wages and salaries cost
be in a flexible budget for 600 lawns?
a. $18,000
b. $20,000.
c. $23,000.
d. $25,000.
Slide 16
Quick Check
What should the
be the
totaltotal
wages
wages
andand
salaries
salaries
cost
costinina aflexible
be
flexiblebudget
budgetforfor600
600lawns?
lawns?
a. $18,000
b. $20,000.
c. $23,000.
d. $25,000.
Total wages and salaries cost
= $5,000 + ($30 per lawn 600 lawns)
= $5,000 + $18,000 = $23,000
McGraw-Hill Education (Asia)
McGraw-Hill/Irwin
Slide 17
Learning Objective 2
Slide 18
Activity Variances
Planning
budget revenues
and expenses
Flexible
budget revenues
and expenses
Slide 19
Activity Variances
Lets use
budgeting
Slide 20
Activity Variances
Larrys Flexible Budget Compared with the Planning Budget
Slide 21
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.
Slide 22
Learning Objective 3
Slide 23
Actual revenue
Actual cost
Slide 24
budgeting
Slide 25
Slide 26
Slide 27
Learning Objective 4
Prepare a performance
report that combines
activity variances and
revenue and spending
variances.
Slide 28
budgeting
Slide 29
Slide 30
Slide 31
Slide 32
State funding
Donations
Endowments
Universities
McGraw-Hill Education (Asia)
McGraw-Hill/Irwin
Slide 33
Slide 34
Learning Objective 5
Slide 35
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Slide 38
Learning Objective 6
Understand common
errors made in preparing
performance reports
based on budgets and
actual results.
Slide 39
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Slide 42
End of Chapter 11
Slide 43