The flexible budget is used to compare actual results to the budget for the purpose of computing revenue and spending variances. These variances are observed through the variance analysis cycle. The cycle begins with the preparation of performance reports in the accounting department. These reports highlight variances which are different between actual results and what should have occurred according to the budget. The variances raise questions such as "Why did this variance occur?" or "Why is this variance larger than it was last period?" The significant variances are then investigated to discover their root causes. What do you think happens after significant variances are discovered? How do the next period's operations carried out?