Explain the Difference Between a Defined-Contribution and Defined-Benefit Plan

question 171

Essay

Explain the difference between a defined-contribution and defined-benefit plan.

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Definitions:

Recognition Of Variances

The process of identifying and documenting the differences between actual and budgeted costs.

Flexible Budgets

Budgets that adjust or flex with variations in activity levels or other relevant factors, allowing more accurate comparisons to actual results.

Cost Driver

A factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes overhead costs.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent or salaries.