Fixed Budget Flexible Budget Fixed budget is inflexible and does not change with the actual volume of output achieved. Flexible budget can be suitably recasted quickly according to level of activity attained. Fixed budget assumes that conditions would remain static. Flexible budget is design to change according to changed conditions. Costs are not classified according to their variability i.e. fixed, variable and semi variable. Coasts are classified according to the nature of their variability. Comparison of actual and budgeted performance cannot be done correctly if the volume of output differs. Comparisons are realistic as the changed plan figures are placed against actual ones. It is difficult o forecast accurately the resultsin it. Flexible budget clearly shows the impact of various expenses on the operational aspects of the business. Only one budget at a fixed level of activity is prepared due to an unrealistic expectation on the part of the management Series of budgets are prepared at different level of activities. Fixed budget has a limited application and is inefficient as a tool for cost control. Flexible budget has more application and can be used as a tool for cost control. If the budgeted and actual activity levels vary, the correct ascertainment os coasts and fixation of prices becomes difficult. Flexible budget helps in fixation of prices and submission of tenders due to correct ascertainment of coasts.
is a plan for a single level of production, whereas a flexible budget can be converted to any level of production.
there are some difference among activity based flexible budget and conventional fllexible budget, the main differ is number of cost driver that use to allocat OHC, so my dissertation about this subject
true
Here are the differences between the two: Flexible Budget-A flexible budget is a budget that adjusts or flexes for changes in the volume of activity. The flexible budget is more sophisticated and useful than a static budget, which remains at one amount regardless of the volume of activity. Rolling Budget-Method in which a budget established at the beginning of an accounting period is continually amended to reflect variances that arise due to changing circumstances. Hope this helps!
Actual sales (quantity ) = flexible budget sales (quantity ) , because the flexible budget is prepared based on the actual activity level (units sold ) to avoid misleading of compering the static budget sales and actual sales
is a plan for a single level of production, whereas a flexible budget can be converted to any level of production.
there are some difference among activity based flexible budget and conventional fllexible budget, the main differ is number of cost driver that use to allocat OHC, so my dissertation about this subject
true
Here are the differences between the two: Flexible Budget-A flexible budget is a budget that adjusts or flexes for changes in the volume of activity. The flexible budget is more sophisticated and useful than a static budget, which remains at one amount regardless of the volume of activity. Rolling Budget-Method in which a budget established at the beginning of an accounting period is continually amended to reflect variances that arise due to changing circumstances. Hope this helps!
Actual sales (quantity ) = flexible budget sales (quantity ) , because the flexible budget is prepared based on the actual activity level (units sold ) to avoid misleading of compering the static budget sales and actual sales
fixed budget is prepared at the start of the period and flexible budget is prepared at the end of period it is adjusted from current activity level of company...
Fixed or Static buget is for a particular activity level. Flexible budget is for a range of activity level. Differentiate between Fixed and Flexible budget ? Needs a complete answer.
There is no difference between them.. Their difference only is how you understood about financial budget.. :)
flexible budget and actual results
iiiustrate by means of a diagram the budget planning process show clearly the difference between a functional budget and a financial budget
Using a Budget to Evaluate PerformanceSo, what happens when the period's over? At period end, it's time to determine whether we fell in line with our planned expenditures. That's when a flexible budget is used. A flexible budget is a budget with figures that are based on actual output. It's then compared to a company's static budget to get variances (differences) between what level of spending was expected and what actually occurred.With a flexible budget, budgeted dollar values (i.e. costs or selling prices) are multiplied by actual units to determine what particular number will be given to a level of output or sales. This yields the total variable costs involved in production. The second component of the flexible budget is the fixed cost. Typically, the fixed cost does not differ between the static and flexible budgets.There are tons of variances that can arise in the static budgeting system. The two most basic variances are the flexible budget variance and sales-volume variance. The flexible budget variance compares the flexible budget to actual results to determine the effects that prices or costs have had on operations. The sales volume variance compares the flexible budget to the static budget to determine the effect that a company's level of activity had on its operations. From these two budgets, a company can develop individual flexible and static budgets for any element of its operations. For example, the static budget variance is the difference between the static budget and the company's actual results. The variances are always classified as either favorable or unfavorable.If sales volume variance is unfavorable (flexible budget is less than static budget), the company's sales (or production with a production volume variance) will turn out to be less than anticipated. If, however, the flexible budget variance was unfavorable (the variance effects eventual cash flows negatively) this would be a result of price or cost. By knowing where the company is falling short or exceeding the mark, managers can do a better job of evaluating the company's performance and use the information to make changes to fu
A budget "variance" is the difference between planned and actual performance.