A set of revenue and expense projections at various production or sales volumes. The cost allowances for each expense are able to vary as sales or production vary.
FLEXIBLE BUDGET is based upon different levels of activity. It is a very useful tool for comparing actual costs experienced to the cost allowable for the activity level achieved, i.e. it is dynamic in nature as compared to static. A series of budgets can be readily developed to fit any activity level. Flexible budgeting distinguishes between fixed and variable cost, thereby allowing for a budget that can be automatically adjusted to the level of activity actually attained.
Flexible Budget
A budget that considers different levels of production or sales. A flexible budget makes different amounts available to departments depending on what production or sales are realized. For example, a flexible budget may make 6% more money available to its research and development department if its revenue increases 6%.
FLEXIBLE BUDGET is based upon different levels of activity. It is a very useful tool for comparing actual costs experienced to the cost allowable for the activity level achieved, i.e. it is dynamic in nature as compared to static. A series of budgets can be readily developed to fit any activity level. Flexible budgeting distinguishes between fixed and variable cost, thereby allowing for a budget that can be automatically adjusted to the level of activity actually attained.
Flexible Budget
A budget that considers different levels of production or sales. A flexible budget makes different amounts available to departments depending on what production or sales are realized. For example, a flexible budget may make 6% more money available to its research and development department if its revenue increases 6%.
No comments:
Post a Comment