Question

1) How do step-wise costs and curvilinear costs differ?

2) what is the benefit of continuous budgeting?

Answer 1

1) Step wise costs are the costs or expenses that does not changes with a range of production but can change when activity threshold is passed out or increases from the activity threshold.

Curvilinear costs are the costs or expenses that are not consistent and increases inconsistently by the change in the volume of production.

In the step wise costs, costs or expenses changes in a patter of steps that reflects some type of consistency. While in curvilinear costs, there is no step whse ruse in costs rather the rise is irregular.

Step wise costs are linear costs whereas the curvilinear costs are nonlinear costs.

2) Continous budgeting is the process of adding a new month to a budget of multi period budget done continously one after another as one month ends.

It's benefits are :

• Planning and the budgeting can be done more properly through continous budgeting by dealing with uncertainty. It focuses on coming months budget rather than focussing long term budgets of future.
• It can easily deal with rapid changes needed in organization and changes can be fone instantly and technology can be updated accordingly.
• Budget is reassessed at regular intervals and changes are made as per required.
• The budget of s generally extended for s particular period of term.