Some people feel that a budget is only a guideline, while others believe budgets should be strictly adhered to. What do you think? If you were the GM, what would be your general budget philosophy and how would you handle departments with large budget variances? Would your approach differ if your bonus depended on reaching budgeted goals? Why or why not?

LO 7: Compute and interpret operating and cash budget variances and explain how to calculate standard price and cost variances and how to interpret them.