Question 1. What other examples of cost drivers can you think of?
Question 2. It would seem to me that payroll would be considered as variable when it is subject to change. One example that comes to mind is seasonal hires. Local retailers often beef up their workforce during the holidays. To me this would be an example of when payroll might be considered to be a variable expense. Another example that comes to mind would be pay based on performance. I once had a job where I was paid piece rate. The faster I worked the more money I made. I'm not sure if this would be a variable cost, but it makes sense to me that it would. My pay was dependent upon my productivity. Does anyone have any thoughts on this?
Question 3. 'Budgeting is an unnecessary burden on many mangers. It takes time away from important day-to-day problems'. Do you agree? Explain.
Question 4. 'We want a flexible budget because costs are difficult to predict. We need the flexibility to change budgeted costs as input prices change.' Does a flexible budget serve this purpose? Explain.