ACT 460 Module 6 Critical Thinking : Variance Analysis
Critical Thinking: (100 )
Choose one of the two options below. Option #1: Variance Analysis
The budgeting process may be approached differently in various firms. Top-down budgeting has its inception with directives from senior management who prepare the budget for staff and assess performance based on objectives established at higher levels. Any additional compensation received occurs as a result of achieving budgetary targets imposed by others. In contrast, bottom-up budgeting reflects the predictions of cost, revenue, profit, and investment center managers—proposed and approved by senior managers. Incentives are negotiated by managers proposing the budget rather than imposed by higher level executives.
In a well-written paper demonstrating CSU-Global standards, answer the following questions:
Define a flexible budget and describe its use. Under which budgeting approach would flexible budgets
more likely be used, and why?
volume variances? Rationalize your response.
In addition, include two or three outside references to support your research and conclusions. Your paper should meet the following requirements:
2-3 pages in length
Selling, marketing and distribution expenses General and administrative expenses
Variable cost and volume data Raw materials = 0.25 lbs x $2.00/lb.
Direct labor = 0.025 hr x $10/hr.
Volume in units
Variable costs total