Budgeting and Variance Analysis (20 marks)

a. Describe the budgeting process and its importance in organizational planning and control.

b. ABC Retail Store prepares a flexible budget for the upcoming quarter based on expected sales of 10,000 units. The budgeted costs per unit are as follows: variable costs $20, fixed costs $50,000. At the end of the quarter, actual sales volume is 12,000 units, with actual variable costs of $240,000 and actual fixed costs of $60,000. Calculate the sales volume variance, flexible budget variance, and sales price variance. Interpret the variances and discuss their implications for management decision-making.