Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 7

Explain primary reasons why actual direct materials cost for a given period would be different from direct materials cost contained in the master (static) budget that was prepared before the start of the period.

Step 1 of 2

The managers and the top management of the organizations conduct strategic analysis and budgeting to have a forecast of the process. The probability with which the goals can be achieved is determined with the output of the analysis. The actual results of the project will be uncertain as the values of the variables taken for the calculation are not accurate.