What are budget variances? What factors or events contribute to variances? What is the relationship between the sensitivity analysis in preparing the budget and variance analysis in managing the budget?
The response addresses the queries posted in 670 words with references.
//In this paper, we will discuss about the budget variances and the factors responsible for them. Before discussing this, we are required to understand the relevance of a budget. A budget is a statement of the expected revenues and expenses for a business. Firstly, we write about the budget variance under the heading budget variance, for example: //
Difference between budgeted and actual performance is known as budget variance. If the actual performance is better than the budgeted performance it is known favorable variance. It is denoted by letter F and if the actual performance is worse than the budgeted performance it is known as unfavorable or adverse variance. It is denoted by letter A or U.
//There are a number of factors that lead to a budget variance and it is really important for an organization to understand them so as to prevent itself from them. Three key factors include the discrepancy in the cost incurred on material, labor and wages, which have been explained in the points below. //
Causes leading to discrepancy between budgeted and ...
450 words, APA