‘The revenue variance is labeled fa

‘The revenue variance is labeled favorable (unfavorable) when the revenue in the flexible budget is greater than (less than) the planning budget. The expense variances are labeled favorable (unfavorable) when the expense in the flexible budget is less than (greater than) the planning budget.
budget, actual revenue should have been higher than budgeted revenue by $18,000 (= $198,000 — $180,000). This activity variance is shown on the report as $18.00f> f (favorable). Similarly, the flexible budget based on 1,100 client-visits shows electricity costs of s ! ! (= $1,500 + $0.10 per client-visit X 1,100 client-visits). The planning
budget based on 1,000 client-visits shows electricity costs of >()(= $1,500 + $0.10 per client-visit X 1,000 client-visits). Because the salon had 100 more client-visits than anticipated in the budget, actual electricity costs should have been higher than budgeted costs by $10 (= $1,610 — $1,600). The activity variance for electricity is shown on the report as 0 I (unfavorable). Note that in this case, the label “unfavorable” may be a little misleading. Costs should be $10 higher for electricity simply because business was up by 100 client-visits; therefore, is this variance really unfavorable if it was a necessary cost of serving more customers? For reasons such as this, we would like to caution you against assuming that unfavorable variances always indicate bad performance and favorable variances always indicate good performance.
Because all of the variances on this report are solely due to the difference between the actual level of activity and the level of activity in the planning budget from the beginning of the period, they are called activity variances. For example, the activity variance for revenue is ' 0 > F, the activity variance for electricity is $10 , and so on. The
most important activity variance appears at the very bottom of the report; namely, the $! 3.710 F (favorable) variance for net operating income. This variance says that because activity was higher than expected in the planning budget, the net operating income should have been $13,710 higher. We caution against placing too much emphasis on any other single variance in this report. As we have said above, one would expect some costs to be higher as a consequence of more business. It is misleading to think of these unfavorable variances as indicative of poor performance.
On the other hand, the favorable activity variance for net operating income is important. Let’s explore this variance a bit more thoroughly. First, as we have already noted, activity was up by 10%, but the flexible budget indicates that net operating income should have increased much more than 10%. A 10% increase in net operating income from the ‘ Hỉ 'H in the planning budget would result in net operating income of $ 18,480 (= 1.1 X $16,800); however, the flexible budget shows much higher net operating income of S70 . Why? The short answer is; Because of the presence of fixed costs.

Kết quả (Việt) 1:

' Phương sai doanh thu được dán nhãn thuận lợi (bất lợi) khi doanh thu trong ngân sách linh hoạt lớn hơn (ít hơn) lập kế hoạch ngân sách. Chênh lệch kinh phí được dán nhãn thuận lợi (bất lợi) khi chi phí trong ngân sách linh hoạt là ít hơn (lớn hơn) lập kế hoạch ngân sách. ngân sách, thu nhập thực tế cần phải có cao hơn ngân sách thu nhập của $18,000 (= $198,000 — $180.000). Phương sai hoạt động này được thể hiện trong báo cáo là $18 .00f > f (thuận lợi). Tương tự, ngân sách linh hoạt dựa trên 1.100 lượt truy cập khách hàng cho thấy chi phí điện năng của s!! (= $1.500 + $0,10 cho mỗi khách hàng ghé thăm X 1,100 khách hàng-lượt truy cập). Việc lập kế hoạchngân sách dựa trên 1.000 lượt truy cập khách hàng cho thấy chi phí điện năng > () (= $1.500 + $0,10 cho mỗi khách hàng ghé thăm X 1,000 khách hàng-lượt truy cập). Bởi vì các tiệm có 100 Thêm khách hàng-thăm hơn dự đoán trong ngân sách, chi phí điện năng thực tế cần phải có cao hơn ngân sách chi phí $ 10 (= $ 1.610 người — $1.600). Phương sai hoạt động điện được thể hiện trong báo cáo như 0 tôi (không thuận lợi). Lưu ý rằng trong trường hợp này, nhãn "bất lợi" có thể là một chút sai lầm. Chi phí cần là $10 cao cho điện chỉ đơn giản là vì kinh doanh đã lên bởi 100 khách hàng truy cập; do đó, là phương sai này thực sự bất lợi nếu nó là chi phí cần thiết phục vụ thêm nhiều khách hàng? Vì lý do như thế này, chúng tôi muốn cảnh báo bạn với giả định rằng bất lợi chênh lệch luôn luôn chỉ ra hiệu quả xấu và chênh lệch thuận lợi luôn cho thấy hiệu suất tốt.Because all of the variances on this report are solely due to the difference between the actual level of activity and the level of activity in the planning budget from the beginning of the period, they are called activity variances. For example, the activity variance for revenue is ' 0 > F, the activity variance for electricity is $10 , and so on. Themost important activity variance appears at the very bottom of the report; namely, the $! 3.710 F (favorable) variance for net operating income. This variance says that because activity was higher than expected in the planning budget, the net operating income should have been $13,710 higher. We caution against placing too much emphasis on any other single variance in this report. As we have said above, one would expect some costs to be higher as a consequence of more business. It is misleading to think of these unfavorable variances as indicative of poor performance.On the other hand, the favorable activity variance for net operating income is important. Let’s explore this variance a bit more thoroughly. First, as we have already noted, activity was up by 10%, but the flexible budget indicates that net operating income should have increased much more than 10%. A 10% increase in net operating income from the ‘ Hỉ 'H in the planning budget would result in net operating income of $ 18,480 (= 1.1 X $16,800); however, the flexible budget shows much higher net operating income of S70 . Why? The short answer is; Because of the presence of fixed costs.