1. Define a flexible budget. Provide an example of how a flexible budget is used in the real world.
A flexible budget consists of adjusting expenditures according to the evolution of real incomes. So we get a budget with real results. The flexible budget is restructured according to activity levels, which is why it is a good performance evaluation tool and useful for any planning. Just like its good odds the flexible budget has its disadvantages as well. It may be a good tool but difficult to formulate, because there are several costs that are not entirely variable. Therefore, it will be necessary to take into account those fixed cost components that must be calculated and then included in the flexible budget formula.
The flexible budget generally works best in a relatively small income range. Given …show more content…
The overall variance in the labor force could result from any combination of paid workers at rates of scheduled hours of work. In terms of the change in the rate of work, the difference shows the difference between the normal rate and the actual rate for the hours actually worked. While at the level of the variance of the efficiency of the workforce, the discrepancy brings out the difference between the normal hours of direct work that should have been used at the hours actually worked.
3. What is a responsibility center? Provide an example of a responsibility center.
A responsibility center is a part of a business for which a manager has authority and responsibility. The departments of the company are the most common responsibility centers. The responsibility center manager can control either costs, or both costs and revenues, or costs, revenues, and investments; the responsibility center is called, respectively, cost center, profit center, investment center.
Explain how to use a return on investment (ROI) to evaluate
A flexible budget consists of adjusting expenditures according to the evolution of real incomes. So we get a budget with real results. The flexible budget is restructured according to activity levels, which is why it is a good performance evaluation tool and useful for any planning. Just like its good odds the flexible budget has its disadvantages as well. It may be a good tool but difficult to formulate, because there are several costs that are not entirely variable. Therefore, it will be necessary to take into account those fixed cost components that must be calculated and then included in the flexible budget formula.
The flexible budget generally works best in a relatively small income range. Given …show more content…
The overall variance in the labor force could result from any combination of paid workers at rates of scheduled hours of work. In terms of the change in the rate of work, the difference shows the difference between the normal rate and the actual rate for the hours actually worked. While at the level of the variance of the efficiency of the workforce, the discrepancy brings out the difference between the normal hours of direct work that should have been used at the hours actually worked.
3. What is a responsibility center? Provide an example of a responsibility center.
A responsibility center is a part of a business for which a manager has authority and responsibility. The departments of the company are the most common responsibility centers. The responsibility center manager can control either costs, or both costs and revenues, or costs, revenues, and investments; the responsibility center is called, respectively, cost center, profit center, investment center.
Explain how to use a return on investment (ROI) to evaluate