1. Why is the sales forecast so important in developing the master budget?
2. When would the master budget profit equal the flexible budget profit?
3. Managers in some companies claim that they do not use flexible budgeting, yet they compute a sales volume variance. How is that different from flexible budgeting?
4. For governmental agencies, a budget places a legal limit on expenditures. As employees are asked for input into the budgeting process, what types of biases are likely to be encountered? Explain why these biases exist.