Causes of Budgeting Variances and Remedial Actions

These flashcards cover key terms and concepts related to budgeting variances and their implications in business management, including remedial actions.

Selling Price Adjustment

Price changes made in response to competitor actions or to provide customer privileges.

Remedial Actions for Sales Variance

Strategies such as enhancing brand recognition, increasing advertisements, offering discounts, adopting aggressive pricing, redesigning product mix, and conducting market research.

Materials Variance

The difference between actual and budgeted material costs, influenced by inventory price and usage.

Inventory Price

Factors affecting inventory price include changes in supplier sales terms, foreign exchange rates, and increased usage.

Labour Variance

The difference between actual and budgeted labor costs, determined by wage rate and labor efficiency.

Wage Rate Changes

Variations in compensation due to market wage changes or better production planning.

Labour Efficiency Issues

Problems related to low efficiency that can be addressed by training or automation.

Selling and Administrative Expense Variance

The difference in fixed and variable costs related to selling and administrative expenses.

Fixed Costs Changes

Adjustments in rent, salaries, or operating expenses that impact fixed costs.

Variable Costs Adjustments

Changes in commission rates or distribution costs affecting overall expenses.