Variance analysis and flexible budgeting

Variance Analysis The budgeting process may be approached differently in various firms. Top-down budgeting has its inception with directives from senior management who prepare the budget and assess performance based on objectives established at higher levels. Any additional compensation received occurs as a result of achieving budgetary targets imposed by others. In contrast, bottom-up budgeting reflects the predictions of cost, revenue, profit, and investment center managers—proposed and approved by senior managers. Incentives are negotiated by managers proposing the budget rather than imposed by higher-level executives.In a well-written paper demonstrating standards, answer the following questions:1. Define a flexible budget and describe its use. Under which budgeting approach would flexible budgets more likely be used, and why?2. What might be the most important consideration in investigating budget variances?3. What are the potential benefits of monitoring direct cost variances?4. What are the potential benefits of monitoring overhead variances? 5. Should managers be commended favorable overhead spending, efficiency, and production volume variances? Rationalize your response.In addition, include two or three outside references to support your research and conclusions. Your paper should meet the following requirements:• 2-3 pages in length• Formatted according to the APA Requirements• Include two or three outside references to support your research and conclusionsReferenceHorngren, C. T., Datar, S. M., & Rajan, M. V. (2015). Cost accounting: A managerial emphasis. (15 ed.). Upper Saddle River, NJ: Pearson Education, Inc. ISBN-13: 9780133428704. Retrieved from http://www.coursesmart.com/9780133428841/firstsection (Horngren, Datar & Rajan, 2015)