Introduction

At periodic intervals-typically at the end of each month, quarter, and year- the accounting department in each division of a company distributes a set of reports to the division's managers. These reports describe the financial performance of the division and its major departments over the time period. They identify the revenues generated from the division's products and the costs incurred in their production. The results from individual departments are combined to determine divisional results, and the results from individual divisions are in turn consolidated to determine the results for the overall corporation. Cost reports for each of these activities show actual amounts, budgeted amounts, and the differences between the two. This reporting is carried out for the individual period and for the year to date.