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Hi Mr.Moffat why a management accountant make statement of variances or operating statements???why it is necessary to rconcile Budgeted profit with actual or budgeted contribution with actual contribution?
I do explain this in the lectures!
One of the main purposes of the budget is to have something to compare what actually happens with.
If, for example, we actually pay more in wages than we were budgeting on then we will want to know what went wrong so that then we can try and correct any problem.
Management will want an explanation of why the actual profit is different from the profit they budgeted on – that is what the operating statement is doing.
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