Question

2. How doesa zero based budget differ froma standard budget and what arethe benefits ofzerobased budgeting? 4. The XYZ ManufacturingCompany has higher than expected sales. They have favorablevariance in profits and revenue They likely have circle one) favorable/unfavorable variance incosts? 6. When should we investigate variances in actual resultsvs. budget? 8. What does a balancedscorecard measure? GIVE FEEDB o search

Answer 1

2. Zero based budgeting is method of budgeting which requires each cost elements to be specifically justified, as though the activities to which the budget relates were being undertaken for the first time. It is prepared and justified from zero, instead of simple using last year's budget as base. It follows Investigative approach

Standard budgeting: It is accounting oriented. Based on Standard facts & Past budget with some inflation by respective managers. It follows routine approach.

4. If XYZ is expecting favourable variances in revenues & profits then they might have under estimated their respective costs. Therefore, they likely to have unfavourable variance in costs. (It seems question is not clear)

6. a. When there are small variances  between actual and standard which are uncontrollable , then they should not be investigated.

b. When there are adverse variances (since Management treats adverse variances are more important than favourable)

c. When the cost of investigation is less than the benefits of correcting the cause of the variance.

d. Variances monitoring should be done periodically in order identify any trends. Therefore, investigation to be carried on any steadily worsening trend

8. Balanced Score Card Measure (BSC) : Balanced Scorecard is a strategy management system that helps managers to translate organisation strategy into operational objectives and implement it. It is used to identify and improve various internal functions of a business and their resulting external outcomes. It is used to measure and provide feedback to organizations.

Six basic components of BSC are perspectives, themes, objectives, measures, targets, and initiatives.