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Hi John
I watched the lecture on Chapter 11 and while you were introducing the flexed budget you said the reason we prepare it is “if we are using it for control purposes…” but then I don’t think you finished the sentence you went straight into example 2
Would the complete sentence be?
“if we are using a budget for control purposes we flex the budget in order to determine how managers performed using the actual level of activity ”
Thanks in advance and apologise if I missed it in the lecture!
Hugh
What you have written is correct. It would be silly to measure the managers performance by reference to the original (fixed budget) because if we produced more then we would obviously have expected to spend more even if the managers had done their jobs perfectly.
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