General Studies · Budgetary Control
Under the framework of Budgetary Control in a large commercial banking institution, when a branch manager identifies a persistent unfavorable variance in the non-interest income category despite an increase in digital transaction volumes, which of the following actions aligns closest with responsibility accounting and flexible budgeting principles?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Implementing an immediate across-the-board reduction in discretionary operational expenditures to offset the income shortfall without adjusting the master budget.
- 2Conducting a detailed variance analysis to segregate controllable and non-controllable factors and subsequently revising the departmental flexible budget to reflect the actual volume of transactions processed.✓
- 3Transferring the deficit to the head office accounts as a sunk cost to maintain the performance rating of the specific branch for the current financial quarter.
- 4Increasing the service charges on manual transactions immediately to bridge the gap between the budgeted income and actual income regardless of market competition.
Correct answer
Conducting a detailed variance analysis to segregate controllable and non-controllable factors and subsequently revising the departmental flexible budget to reflect the actual volume of transactions processed.
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