Question 1
Management by exception focuses only on those variances management considers important. List three factors that managers use in deciding whether or not to investigate a variance and give an example of each.
Question 2
Managers use budgeting to control and evaluate their operations. Two types of budgets that are discussed in chapter 6 are the static budget and the flexible budget. How do the two budgets differ and explain how the flexible budget is used in evaluating performance.