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1. What is the operating budget and what are its components listing first the budget relied on by most other supporting budgets.

The operating budget is an income statement that has been budgeted, as well as the schedules for the budgeted income. The revenue budget is the first budget and is the one the remaining budgets rely on.

2. Contrast the calculation differences between the flexible-budget and sales-volume variances.

Flexible-budget variance is the distinction between the real results and the correlating flexible-budget amount, while the sales-volume variance is the change between the flexible-budget amount and the correlating static-budget amount. The way to find the flexible-budget amount is to subtract the flexible-budget amount from the actual result, and the way to find the sales-volume variance is to subtract the static budget amount from the flexible-budget amount.

3. How do managers use variances?

Managers have begun to pay more attention to the areas of their business that have variances in their budgets in order to resolve the issues and negate the variances. By inspecting the variance, the manager is able to cut costs related to parts, production, and employee time wages.