1. Describe the variance analysis cycle
2. Define the concept of management by exception? Explain how it supports managers.
3. What other name does chapter 9 give to the master budget?
4. Some authors use the term flexible budget to mean a budget showing revenues and costs at various levels of activity. How does the author of your text define it? Explain the meaning of information presented in the flexible budget column of a report.
5. How does the course text describe the flexible budget approach and its characteristics?
6. The flexible budget can also be used as a performance evaluation tool. If used in this manner what does the flexible budget do?
7. Describe the process of how a flexible budget works.
8. Summarize the deficiencies of using a static planning budget in performance evaluation.
9. Describe the primary cause of an activity (volume) variance. If such a variance is unfavorable is should a manager assume "bad" performance?
10. What is the most important activity variance? Explain why.
11. The flexible budget is based upon actual activity levels. What does this indicate?
12. Describe the term revenue variance and the meaning of an unfavorable and favorable revenue variance.
13. Describe the term spending variance and the meaning of an unfavorable and favorable spending variance.
14. Describe the information presented in a flexible budget performance report.
15. Why does the flexible budget performance report provide a more valid assessment of performance than using the static planning budget?