Flexible BudgetPresented by:
•M. Arsalan Khan.•M. Qasim.•Hamza Niazi.
Flexible Budget
Adjusts for change in activity volume Depends upon revenue generated. Allows for infinite changes. A tool for comparing actual and budgeted
performances.
Introduction
covers a range of activities
easy to change according to variations of
production and sales levels
facilitates performance
measurement and evaluation
accounts the changes in the
volume of activity
replaces a static budget
for control
Characteristics
Decide the range of activities
determine the cost behavior
select the activity level
prepare flexible budget at each selected level.
Steps for Preparing Flex Budget
Adjustment for Predictions
Adapting Change
Control and Evaluation
Inflation and Variance
Advantages
Continuous Monitoring
Inaccurate Adjustments
Lack of Information
Complexity
Disadvantages
Flexible Budgetchange with the actual volume of the output
Can ascertain costs in different levels of activities.
prepared by classifying the costs according to their variable nature
Comparison
Flexible Budgetprepared at different levels of
activities considering the possible changes
has a wide application as an effective tool for cost control.
Comparison (cont..)
Flexible
•Old/flourished companies.
Static •New companies.
Use of Flex and Static Budget