Budgeting

Question 1

What is budgetary control?

Answer 1

It’s the process of analysing budgets to check performance against the original plan. (Are you over or under budget?)

Question 2

What is favourable variance?

Answer 2

It’s actual is better than planned budget (over budget for revenue budget but under budget for expenditure budgets); positive impact as will lead to making more profit than originally planned

Question 3

What is adverse variance?

Answer 3

It’s actual is worse than planned budget (under budget for revenue budget but over budget for expenditure budgets); negative impact leading them to make less profit than planned