The variances reported in the final budget-to-actual comparisons incorporated in the financial statement of many governments...

The variances reported in the final budget-to-actual comparisons incorporated in the financial statement of many governments may be of no value in revealing the reliability of budget estimates made at the start of the year.

Why? How can you rationalize this limitation of the budget-to-actual comparisons?

Solutions

Expert Solution

As we know that budget to actual comparisions are used for various objectives by the government but main motive are for meeting legal compliance or for identifying managerial efficiency or inefficiency on the basis of budget standards.

We know that difference between actual and budgeted need not to be disclosed in separate column by the entities as per GASB but it is done to measure the relevant differences and for making required corrective actions in real time. Thus most of the governments and organization throught the words involves in such practices and this looks quite resonable for measuring actual performance of the entity in compare to fixed standard budgets.

For every government, it is necessary to know the progress of financial performance time to time which can be measured on the basis of comparisions of final results and fixed standards. So finally we can say that such differences must be measured on the basis of final budgets.

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

2016 2017 2017 Preliminary Final Actual YTD Actual YTD Budget Cost Standard Budget Standard 2018 Budget...

2016 2017 2017 Preliminary Final Actual YTD Actual YTD Budget Cost Standard Budget Standard 2018 Budget 2018 Budget Salaries and Wages-V $346,700 $185,200 $179,000 3.88 Fringe Benefits-V 111,700 59,200 58,000 1.24 Supplies-V 230,600 121,000 119,000 2.54 Depreciation-F 57,400 30,000 29,000 60,000.00 Interest-F 17,800 8,400 9,000 16,800.00 Other-V 207,400 109,300 110,000 2.29 Total Expenses $971,600 $513,100 $505,000 76,809.95 Patient days 95,000 47,700 47,200 97000 97500 Forecast 2017 Actual

Actual Results Revenue & Spending Variances Flexible-budget Activity Variances Planning (Static) Budget TotalVariance Shoes sold (q)...

Actual Results Revenue & Spending Variances Flexible-budget Activity Variances Planning (Static) Budget TotalVariance Shoes sold (q) $19,000 20,000 Revenue ($4.00q) $79,000 $80,000 Expenses: COGS ($1.50q) $31,000 $30,000 Wages and salaries ($8,000 + $.50q) $16,000 $18,000 Supplies ($.25q) $4,600 $5,000 Insurance ($2,000) $2,100 $2,000 Miscellaneous costs ($.30q) $5,400 $6,000 Total expenses $59,100 $61,000 Net operating income $19,900 $19,000 Completely fill in table above.

Show me how 2016 2017 2017 Preliminary Final Actual YTD Actual YTD Budget Cost Standard Budget...

Show me how 2016 2017 2017 Preliminary Final Actual YTD Actual YTD Budget Cost Standard Budget Standard 2018 Budget 2018 Budget Salaries and Wages-V $346,700 $185,200 $179,000 3.88 Fringe Benefits-V 111,700 59,200 58,000 1.24 Supplies-V 230,600 121,000 119,000 2.54 Depreciation-F 57,400 30,000 29,000 60,000.00 Interest-F 17,800 8,400 9,000 16,800.00 Other-V 207,400 109,300 110,000 2.29 Total Expenses $971,600 $513,100 $505,000 76,809.95 Patient days 95,000 47,700 47,200 97000 97500 Forecast 2017 Actual

Performance Report Year Ended December 31, 2017 Actual Flexible-Budget Flexible Sales-Volume Static Results Variances Budget Variances...

Performance Report Year Ended December 31, 2017 Actual Flexible-Budget Flexible Sales-Volume Static Results Variances Budget Variances Budget Units sold 108,000 99,000 Revenues (sales) $702,000 $420,750 Variable costs 430,000 237,600 Contribution margin 272,000 183,150 Fixed costs 193,850 105,000 Operating income $78,150 $78,150 The Beekman Company produces engine parts for car manufacturers. A new accountant intern at Beekman has accidentally deleted the calculations on the company's variance analysis calculations for the year ended December 31, 2017. Requirement 1. Calculate all the required...

Variances Original Budget Actual Flexible Budget Units Produced (in units) 10,000 12,000 ? Materials used (kg)...

Variances Original Budget Actual Flexible Budget Units Produced (in units) 10,000 12,000 ? Materials used (kg) 400 700 ? Material cost ($) 8,000 See purchases ? Direct Labour (hours) 35,000 46,102 ? Direct Labour ($) 385,000 507,080 ? Variable Overhead ($) 350,000 419,161 ? Fixed Overhead ($) 160,000 161,000 ? Other Information Overhead is Allocated on Direct Labour Hours During the year, 800 kg of materials were purchased for $5,000 Beginning Inventory: none Ending Inventory: 100kg Required: Calculate the...

Prepare a variance analysis between the budget and actual. You should present three variances: (1) the...

Prepare a variance analysis between the budget and actual. You should present three variances: (1) the difference in profit due to selling more or less units, (2) the difference in profit due to selling units at a higher or lower price, and (3) the difference in profit due to producing more or less units. In terms of variances, discuss the budget and the actual performance and changes needed to make in the budget. (Please answer all questions including discussion question)...

WEEK 5: INCREMENTAL ANALYSIS How does incremental analysis differ from actual to budget comparisons (ABC)? Please...

WEEK 5: INCREMENTAL ANALYSIS How does incremental analysis differ from actual to budget comparisons (ABC)? Please provide an example from your own career or company.

Terracotta Incorporated reported the following accounts and amounts (in millions) in its financial statements for the...

Terracotta Incorporated reported the following accounts and amounts (in millions) in its financial statements for the year ended December 2, 2016. Accounts Payable $ 840 Accounts Receivable 880 Accumulated Amortization 500 Accumulated Depreciation 1,130 Allowance for Doubtful Accounts 30 Cash and Cash Equivalents 1,030 Common Stock 470 Deferred Revenue 1,980 Equipment 7,530 Income Taxes Payable 30 Notes Payable (long-term) 2,670 Notes Receivable (long-term) 250 Prepaid Rent 270 Retained Earnings 7,170 Service Revenue 490 Short-Term Investments 3,950 Software 910 Prepare a...

Why is a budget considered the most important financial document in both governments and non-profits?

18. How are component units and related organizations reported in financial statements prepared by primary governments...

18. How are component units and related organizations reported in financial statements prepared by primary governments 19. What criteria determines whether an entity is a component unit 20. What is a special purpose government and what condition(s) determines whether an entity qualifies as a special purpose government

Subjects