Control: Procedures, Tools, and Systems for Reaching

Control: The set of procedures, tools, and systems that organizations use to reach their goals. Management accounting and control system: An organization's core performance- measurement system. Operational control: The monitoring of short-term operating performance; takes place when mid-level managers monitor the activities of operating-level managers and employees. Financial control: The comparison between actual and budgeted financial results. Variances: Differences between budgeted and actual amounts, for either financial or nonfinancial measures. U denotes an unfavourable effect on Operating Income F denotes a favourable effect on operating income Total operating income variance (1) (2) (3) Actual Flexible Budget Master Budget (AQ)*(AP) (AQ)*(SP) (SQ)*(SP) Total Flexible Budget Sales Volume Variance Variance (2)-(3) (1)-(2) Total operating income Variable (1)-(3) Breakdown total flexible budget variance Selling Price Variance = Actual Sales - Flexible Budget Sales = AQ x (AP -SP) Total Variable Cost Variance = Actual Variable Cost - Flexible Budget Variable Costs = AQ x (AP - SP) (1) (2) (3) Actual Input Cost Actual Input at Flexible-Budget (AQ)*(AP) Standard Cost Amount (AQ)*(SP) (SQ)*(SP) Price (rate) variance = (1)- Quantity efficiency (2) variance= (2)-(3) Breakdown variable cost flexible budget variance Total Flexible Budget Variance = (1) - (3) Variable Cost Variance = Actual Variable Costs - Flexible Budget Variable Costs = (AQ xAP) - (SQ *SQ) Total DL Variance Direct labour rate variance = AQ x ( AP - SP) Direct labour efficiency variance = SQ x (AQ - SQ) Total DM Variance Direct Material Price Variance = AQ x ( AP - SP) Direct Quantity (Usage) Variance = SP x (AQ-SQ)