ECONOMICS

Detailed explanation-1: -Comparing actual results to a budget based on the actual activity for the period is possible with the use of a: A. rolling budget.

Detailed explanation-2: -Comparison between actual results and budgets are made to: Judge managers’ performance. If budgets are not met then managers might have underperformed. Improve next time’s budget. If actual and budget are different it might be that the budget was wrong and needs to be corrected for next time.

Detailed explanation-3: -A flexible budget variance is any difference between the results generated by a flexible budget model and actual results. If actual revenues are inserted into a flexible budget model, this means that any variance will arise between budgeted and actual expenses, not revenues.

Detailed explanation-4: -A flexible budget is a revised master budget based on the actual activity level achieved for a period. The master budget is established before the period begins for planning purposes, and the flexible budget is established after the period ends for control and evaluation purposes.

Detailed explanation-5: -“Budgetary control is a process of comparing the actual results with the corresponding budget data in order to approve accomplishments or to remedy differences by either adjusting the budget estimates or correcting the cause of the difference.” Some people treat budgetary control only as a technique of cost control.