The city of Westwood has an annual budget cycle that begins on July 1 and ends on June 30. At the beginning of each budget year, an annual budget is established for each department. The annual budget is divided by 12 months to provide a constant monthly static budget. On June 30, all unspent budgeted monies for the budget year from the various city departments must be €œreturned€ to the General Fund. Thus, if department heads fail to use their budget by year-end, they will lose it. A budget analyst prepared a chart of the difference between the monthly actual and budgeted amounts for the recent fiscal year. The chart was as follows:

a. Interpret the chart.
b. Suggest an improvement in the budgetsystem

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35,000 30,000 20,000 15,000 5,000 (10,000) (15,000) Months