The budget that is prepared for one level of activity is known as a static budget. A static budget is often one of many other budgets that are created off of a master budget.
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.
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!
they force the manager to compare actual costs at one level of activity to budgeted costs at a different level of activity.
A traditional budget is often referred to as a "static budget." A static budget is not designed to change with changes in activity level. Once sales and expenses are estimated, they become the relevant benchmarks. A flexible budget is an alternative that has some compelling advantages. It relates anticipated expenses to observed revenue. To illustrate, if a business greatly exceeded the sales goal, it is reasonable to expect costs to also exceed planned levels. After all, some items like cost of sales, sales commissions, and shipping costs are directly related to volume. How ridiculous would it be to fault the manager of the business for having cost overruns? Conversely, failing to meet sales goals should be accompanied by a reduction in variable costs. Certainly it would make no sense to congratulate a manager for holding costs down in this case! A flexible budget is one that reflects expected costs as a function of business volume; when sales rise so do certain budgeted costs, and vice versa. The flexible budget responds to changes in activity, and may provide a better tool for performance evaluation. It is driven by the expected cost behavior. Fixed factory overhead is the same no matter the activity level, and variable costs are a direct function of observed activity. When performance evaluation is based on a static budget, there is little incentive to drive sales and production above anticipated levels because increases in volume tend to produce more costs and unfavorable variances. The flexible budget-based performance evaluation provides a remedy for this phenomenon.
Any one can use a budget
a budget which is prepared for one level of activity is:
The IRS budget activity code is how Congress manages the agency besides the appropriation level. An appropriation may contain multiple BACs but always at least one.
Static budget is a budget which envisages only one level of business activity.Here business activity means volume of production or sales.The static budget is camparitively easy to prepare.It tends to be far less accurate then flexible budget.
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.
Variable budgeting is one based on different levels of activity. It is an extremely useful tool for comparing the actual cost incurred to the cost allowable for the activity level achieved. It is dynamic in nature rather than static. By using the cost-volume formula (or flexible budget formula), a series of budgets can be developed easily for various levels of activity. A static (FIXED) budget is geared for only one level of activity and has problems in cost control. Flexible budgeting distinguishes between fixed and variable costs, thus allowing for a budget that can be automatically adjusted (via changes in variable cost totals) to the particular level of activity actually attained. Thus variances between actual costs and budgeted costs are adjusted for volume ups and downs before differences due to price and quantity factors are computed. The primary use of the flexible budget is for accurate measure of performance by comparing actual costs for a given output with the budgeted costs for the same level of output.
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!
they force the manager to compare actual costs at one level of activity to budgeted costs at a different level of activity.
The main difference is, budget is a planned activity to meet the targets whereas financial report is the one which shows the health/wealth of the organization.
The Office of Budget and Management is normally the level that handles with education. The Education Department is the one that disperses money.
how much Energy is kJ is needed for one hour of jogging
The budget activity code is typically represented by a series of digits that indicate specific budgetary activities within an organization or government entity. These codes can vary by agency or program but generally consist of a combination of numbers that classify expenditures and funding sources. To find the precise set of digits for a particular budget activity code, one would need to refer to the relevant financial documentation or guidelines specific to that entity.
The Production Budget for Year One was $60,000,000.