Question 1 Introduction
A favourable revenue variance is where actual revenues are lower than budgeted revenues.
A budget which starts from zero and where each item going into the budget has to be justified by the budget holder is called a zero-based budget.
An advantage of a zero-based budget is that it is quick and easy to prepare.
Budgetary control is the process of using budgets as a control mechanism within a business.
An adverse variance is where budgeted cost is lower than the actual cost.
A favourable revenue variance is where actual revenues are lower than budgeted revenues.
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