1. VARIANCES
1.1. Variance reports help budget holders to perform their function of control
1.2. controllable from uncontrollable variances
1.3. Favourable / Adverse
1.4. Sales revenue variance
1.4.1. Total = volume variances + price variances
1.5. Cost variance
1.5.1. Total direct cost variance = Volume variance (ZERO in flexed budget) + Purchase price variance+ Efficiency of usage variance
2. INFORMATION COMPARISON
2.1. Previous period comparison
2.1.1. year-on-year
2.1.2. month-by-month or quarter-by quarter.
2.1.3. season – by - season
2.2. Forecasts comparison
2.2.1. Cash flow forecast
2.2.2. forecast vs actual
2.2.3. non-financial information
2.3. Budgets comparison
2.3.1. budget and actual results to see whether budget holders can achieve the target
2.3.2. objectives and action plans
3. RESPONSIBILLITY CENTERS
3.1. COST CENTERS
3.1.1. cost information
3.1.1.1. Total actual costs, total budgeted costs
3.1.2. a department, a machine, a project, a new, a product, a person
3.1.3. Productivity Cost per unit Cost per standard hour Actual versus Budgeted
3.2. PROFIT CENTERS
3.2.1. cost and revenue profit centre manager
3.2.2. A sales/service division; Individual shops/outlets in a retail chain; Sales team; Local branches
3.2.3. Profit margin = (Net profit / Sales) x 100% (Also called profit to sale ratio)
3.2.4. Gross profit margin=(Gross profit/Sales) x 100%
3.2.5. Cost / Sales ratios: Measuring how many % each type of cost takes from sales
3.3. INVESTMENT CENTERS
3.3.1. return on capital employed calculate their return rate over capitals. required by senior management whether their investment
3.3.2. Return on capital employed (ROCE) = (Profit/Capital employed) x 100%
3.3.3. Residual income: A centre’s profit after deducting a notional interest cost.
3.3.3.1. The cost = Rate of return required x Capital employed