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Why some company uses budgeted overhead costs rather than actual costs?
Jusliah
the reason was: control the budget,
Wiki User
∙ 15y ago
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What is componets of flexiable budget?
A flexible budget, or "flex" budget, incorporates different expense levels into the budget, depending upon changes in the amount of actual revenue generated. This approach varies from the more common static budget, which contains nothing but fixed expense amounts that do not vary with actual revenue levels.In its simplest form, the flex budget uses percentages of revenue for certain expenses, rather than the usual fixed numbers. This allows for an infinite series of changes in budgeted expenses that are directly tied to actual revenue incurred. However, this approach ignores changes to other costs that do not change in accordance with small revenue variations. Consequently, a more sophisticated format will also incorporate changes to many additional expenses when certain larger revenue changes occur, thereby accounting for step costs. By incorporating these changes into the budget, a company will have a tool for comparing actual to budgeted performance at many levels of activity.
Differences between fixed variable budgets?
Variable budgeting is one based on different levels of activity. It is an extremely useful tool for comparing the actual cost incurred to the cost allowable for the activity level achieved. It is dynamic in nature rather than static. By using the cost-volume formula (or flexible budget formula), a series of budgets can be developed easily for various levels of activity. A static (FIXED) budget is geared for only one level of activity and has problems in cost control. Flexible budgeting distinguishes between fixed and variable costs, thus allowing for a budget that can be automatically adjusted (via changes in variable cost totals) to the particular level of activity actually attained. Thus variances between actual costs and budgeted costs are adjusted for volume ups and downs before differences due to price and quantity factors are computed. The primary use of the flexible budget is for accurate measure of performance by comparing actual costs for a given output with the budgeted costs for the same level of output.
What is a major reason for conglomerate mergers?
By conglomerate mergers, the rather weak units are tied with strong, profitable units, thereby ensuring subtainability of business and trimming of overhead expenses.
Why should you get a bank loan rather than a loan from a finance company?
You will have better advantages
How is the income statement of a service company?
Income statement of services company is same with little difference that there is no purchases inventory as in services company services are provided rather any goods or product.
Why do companies use a predetermined overhead rate rather than actual overhead costs to apply overhead to jobs?
because they have no life, also they predetmined pigs
Is depreciation manufacturing labor?
Depreciation is not a manufacturing labor rather it is manufacturing overhead as machines used in manufacturing is not part of labor rather it is part of overhead.
What is underground power transmission?
power cables under ground rather then overhead.
What is a DOHC motor?
It is an engine rather than motor - Double OverHead Cam
What is componets of flexiable budget?
A flexible budget, or "flex" budget, incorporates different expense levels into the budget, depending upon changes in the amount of actual revenue generated. This approach varies from the more common static budget, which contains nothing but fixed expense amounts that do not vary with actual revenue levels.In its simplest form, the flex budget uses percentages of revenue for certain expenses, rather than the usual fixed numbers. This allows for an infinite series of changes in budgeted expenses that are directly tied to actual revenue incurred. However, this approach ignores changes to other costs that do not change in accordance with small revenue variations. Consequently, a more sophisticated format will also incorporate changes to many additional expenses when certain larger revenue changes occur, thereby accounting for step costs. By incorporating these changes into the budget, a company will have a tool for comparing actual to budgeted performance at many levels of activity.
The flex in the flexible budget relates solely to variable costs?
The flex in the flexible budget relates solely to variable costs such that it uses percentages of revenue for certain expenses. Flex budget is used rather that the usual fixed numbers to allow for an infinite series of changes in budgeted expenses that are directly tied to actual revenue incurred.
In accounting is mileage a direct cost or an overhead?
Mileage is a overhead cost as mileage of cars or trucks which are not directly related with the manufacturing of units of products but required to transfer raw material from one place to another so it is overhead cost rather direct cost.
Where in the world are the golden arches located?
The "golden arches" is not an actual location. They are rather, the nickname for the fastfood company, McDonalds, because their symbol of a big yellow M looks like two golden arches.
What would be considered business objects XI?
Business Objects XI does not refer to an actual object, rather to a platform by the company called Business Objects. Their purpose is to deliver a complete set of end-to-end BI capabilities.
Importance of standard costing?
A valuable management tool, standard costing is part of cost accounting. Rather than using actual costs for direct material, labor and manufacturing overhead, standard costs are used to easily track variances and estimate profit.Though actual costs are still paid, standard costing is often used for inventories and cost of goods sold. The difference between standard and actual costs are known as variances. These variances are what make standard costing such a valuable practice for management. Management can quickly become aware of changes in budgeted costs by tracking the variances.When standard costing is used, you will often hear the terms unfavorable or favorable variance. This refers to changes in actual costs in relation to planned or standard costs. A favorable variance takes place when actual costs dip below standard costs. Conversely, if actual costs rise above standards, the variance is unfavorable.In regards to manufacturing companies, standard costs would first be seen as individual parts or pieces of the finished product. This means that the final standard cost will be the sum of the standard costs of each of the individual pieces of the product.
What a company's principals?
The principle's of a company are a statement of how they do business rather than what they do. A company may also have a mission statement which defines what their goal as a company is (what they do).
What does the phrase business to business mean?
It means a transaction of some form between a company and a company rather than a company and a private customer.
