Flexible Budgets

Flexible Bud modernises
September 12, 2011
Fred Johnston
Flexible Budgets
Organizations rely on work outs as tools to plan for upcoming revenues and expenses. Budgets are valuable when planning for a successful future, but different circumstances can surface that may change the direction of the organizations pecuniary data. One budgeting technique that helps plan for uncertainties and fluctuations is limber budgeting. The next several(prenominal) paragraphs analyze flexible budgets through a discussion of inflexible and variable costs, the major differences between static and flexible budgets, and how flexible budgets assist in a cost- ledger-profit (CVP) analysis.
Static and Flexible Budgets
A static budget is based upon a set train of activity, and is generally prepared prior to the start of the accounting power point: in other words, it is the original budget. Static budgets do non consider data for varied levels of activities, and as such these budgets do not change. The results of static budgets are compared against standard actual financial figures. Static budgets are also known as r separately budgets, serving as control budgets that do not part even if the actual volume of activity differs from the planned volume.
 A flexible budget is an extension of the master budget.



The flexible budget is a tool to evaluate performance: activity statistics may be reviewed, and then forecasted budgeted numbers may be correct accordingly. This type of budget is basically composed of a serial publication of static budgets at different levels of activity, and can change each time the budget is prepared. The major difference in a flexible budget, as compared to a static budget, is the data that is coordinated: flexible budgets display revenues and costs over different volume levels, rather than one constant level. For reference, see Appendix A, which represents a sample static and flexible budget: the static budget remains constant, while the flexible budget incorporates variances to the...If you want to get a full essay, order it on our website: Ordercustompaper.com



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