Performance report
A performance report compares a responsibility centre's actual results to its budget or standard, highlighting variances for management attention; it is the primary tool linking variance analysis to accountability and corrective action.
FrameworkManagement control
See it move
A production supervisor's performance report starts from a budgeted direct materials cost of €150,000. An adverse price variance of €3,200 and a favourable efficiency variance of €1,500 bridge the gap to the actual cost of €151,700. Presenting the figures this way lets management focus on the variances that need investigating rather than rereading every line of the budget.
Check yourself
A production department's October performance report shows direct material costs of €48,000 against a static budget of €44,000. The department produced 10% more units than budgeted. Before concluding that the department overspent on materials, what is the essential analytical step?