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