Final answer:
Two sources to compute budgeted amounts in variance analysis are historical accounting data and industry standards, using quantitative data and mathematical models.
Step-by-step explanation:
Two possible sources of information a company might use to compute the budgeted amount in variance analysis include historical accounting data and industry standards. Companies often use quantitative data from past performance as a benchmark for setting budget expectations.
For example, historical sales figures, production costs, and other financial records can inform future budget estimates. By analyzing this data, a company can identify patterns or trends that will help in making more accurate projections.
Another source is industry standards, which provide guidelines or averages established by industry groups or associations that companies can use as a reference point for budgeting. These standards can be particularly helpful for new companies without past data or when entering new markets.
Mathematical models are utilized in these processes, which might involve breaking down costs into fixed cost, marginal cost, average total cost, and average variable cost.
These models support variance analysis by allowing companies to compare budgeted figures with actual results, understand the relationships between various cost factors, and make adjustments to future budgets to improve cost management and decision-making.