Direct and Overhead Costs Variance Analysis-Variance Analysis

The
budgeting process may be approached differently in various firms.
Top-down budgeting has its inception with directives from senior
management who prepare the budget for staff and assess performance based
on objectives established at higher levels. Any additional compensation
received occurs as a result of achieving budgetary targets imposed by
others. In contrast, bottom-up budgeting reflects the predictions of
cost, revenue, profit, and investment center managers—proposed and
approved by senior managers. Incentives are negotiated by managers
proposing the budget rather than imposed by higher level executives.

In a well-written paper , answer the following questions:

1. Define a flexible budget and describe its use. Under which
   budgeting approach would flexible budgets more likely be used, and why?
2. What might be the most important consideration in investigating budget variances?
3. What are the potential benefits of monitoring direct cost variances?
4. What are the potential benefits of monitoring overhead variances?
5. Should managers be commended for achieving favorable overhead
   spending, efficiency, and production volume variances? Rationalize your
   response.

In addition, include two or three outside references to support your research and conclusions.

Your paper should meet the following requirements:

• 2-3 pages in length
• Formatted according to APA REQUIREMENTS
  
• Include two or three outside references to support your research and conclusions