1. How might service industries predict revenue?

2. You started your own construction business and need to determine the cost of materials used to build one house, and how many materials you will need to do so.

Where would you begin to determine the standard price and quantity needed to build one house?

What would produce a difference between the standard cost to build a house and the actual cost? What would cause a favorable outcome? What would cause an unfavorable outcome?

What action might your company take if you had an unfavorable total direct materials cost variance?

3. Why would managers use a flexible budget? What information does it provide that a regular budget does not?