Accounting › Section T · Budgeting › Topic T.5
Using budgets to evaluate goals
Once the period is over, the budget becomes a yardstick. Comparing actual results with the right budget shows which goals were met, separates the effect of volume from the quality of cost control, and points managers to the few differences worth investigating.
In this topic
- From plan to performance report
- Favourable and unfavourable variances
- Quenby's March results
- The trouble with the static comparison
- Worked example: against the flexible budget
- Splitting the static-budget variance
- Worked example: Quenby's two variances
- Interpreting the variances
- Worked example: which variances to investigate
- Budgets, incentives and ethics
- Common mistakes to avoid
- Key takeaways
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