In this course we have discussed the development of standard costs, static versus flexible budgets, preparation of a master budget, and evaluating variances from standard costs. Please answer the following questions:

1. What are the advantages and disadvantages of developing and using standard costs for performance evaluation?

2. We have covered operating and financial budgets. Which 3 budgets are the most useful and why? Discuss the advantages and disadvantages of each of these 3 budgets.

3. Which 3 variances are the most useful for evaluating performance and why? Be sure to explain each of the variances you select.