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Compare the variable and fixed overhead variance

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Discussion Questions -

1) What are the key business events that trigger the need for flexible budget? Is it always sales volume above or below expected? Can inflation or excessive costs lead to flexible budget if volume is not changed?

2) Compare the variable overhead variance to the fixed overhead variance.

3) Describe the two assumptions used in cost estimation behavior.

4) Give an example of one of the assumptions.

5) A company invests considerable time and money to develop sophisticated cost functions that rate high on all evaluative criteria. In the course of using the cost functions, a manager notes that in several instances, the actual costs were different from the predicted costs, resulting in lower profits during one quarter of the year. The question of the value of the cost function is asked. Give some suggestions on how to answer the manager.

Reference no: EM132455214

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