What is zero budgeting?, A budgeting method where all spending must be justified from zero each period, What is one advantage of zero budgeting?, It may remove unnecessary spending and improve efficiency, What is one disadvantage of zero budgeting?, It is time-consuming because managers must justify all activities carefully, What is a flexible budget?, A budget adjusted according to actual output or activity levels, Why is flexible budgeting more realistic than fixed budgeting?, Because it adjusts targets when actual output changes, What is a variance?, The difference between budgeted figures and actual figures, What is a favourable variance?, A variance that improves profit compared with the budget, What is an adverse variance?, A variance that reduces profit compared with the budget, Why do businesses analyse variances?, To identify problems, improve planning, and support better decision-making, What is management by exception?, Managers focusing attention on significant variances and problem areas.

BUDGETS II

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