Takes place by means of budget reports which compare actual results with planned objectives.Provides management with feedback on operations.Budget reports can be prepared as frequently as needed.Analyze differences between actual and planned results and determines causes
Identifies the name of the budget report.States the frequency of the report.Specifies the purpose of the report.Indicates recipient(s) of the report.

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When used in budgetary control, each budget included in the master budget is considered to be static.Ignores data for different levels of activity.Compares actual results with budget data at the activity level used in the master budget.
Static Budget reports are Appropriate for evaluating a manager"s effectiveness in controlling costs when:
Actual level of activity closely approximates master budget activity level.Behavior of costs is fixed in response to changes in activity.Appropriate for fixed costs
Budgetary process more useful if it is adaptable to changes in operating conditions.Essentially a series of static budgets at different activity levels.Can be prepared for each type of budget in the master budget.
1.Identify the activity index and the relevant range of activity.2.Identify the variable costs and determine the budgeted variable cost per unit of activity for each cost. 3.Identify the fixed costs and determine the budgeted amount for each cost.4.Prepare the budget for selected increments of activity within the relevant range.
Monthly comparisons of actual and budgeted manufacturing overhead costs. A type of internal report.Consists of two sections:Production data for a selected activity index, such as direct labor hours.Cost data for variable and fixed costs. Widely used in production and service departments to evaluate a manager"s performance.
At 9,000 direct labor hours, the flexible budget for indirect materials is $27,000. If $28,000 of indirect materials costs are incurred at 9,200 direct labor hours, the flexible budget report should show the following difference for indirect materials:
Accumulating and reporting costs (and revenues, where relevant) on the basis of the manager who has the authority to make the day-to-day decisions about the items.

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Conditions:Costs and revenues can be directly associated with the specific level of management responsibility.Costs and revenues can be controlled by employees at the level of responsibility with which they are associated.Budget data can be developed for evaluating the manager"s effectiveness in controlling the costs and revenues
15. An auditor was hired after year-end and was unable to observe the counting of the year-end inventory. She is unable to apply other procedures to determine whether ending inventory and related information are properly stated.
Alpha Inc. saw an increase in profits in the previous year following which the management decided to reinvest earnings. These retained earnings will be used to:
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Horngren"s Financial & Managerial Accounting6th EditionBrenda L Mattison, Ella Mae Matsumura, Tracie Miller-Nobles
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