Managers Are Constantly Comparing the Costs of What Was Expected

question 85

Essay

Managers are constantly comparing the costs of what was expected to happen with the costs of what did happen. By examining the differences, or variances, managers can learn much valuable information. Identify and discuss the steps involved in variance analysis.

---

Definitions:

Marginal Tax Rates

The rate at which tax is charged on the last dollar of income earned, indicating the percentage of additional income that will be taxed.

Monetarism

An economic theory that emphasizes the role of governments in controlling the amount of money in circulation as a primary method for stabilizing the economy and controlling inflation.

Rational Expectations Theory

An economic theory that suggests individuals use all available information and make decisions based on their rational outlook, expectations, and available resources.

Discretionary Policies

Economic policies based on judgment and choices by policymakers rather than set rules, often involving government spending and taxation decisions.