What are characteristic of flexible budget?

A flexible budget is easy to change according to variations of production and sales levels. Flexible budget facilitates performance measurement and evaluation. It takes into account the changes in the volume of activity. Flexible budget replaces a static budget for control.

What is a flexible budget?

A flexible budget adjusts based on changes in actual revenue or other activities. The result is a budget that is fairly closely aligned with actual results. This approach varies from the more common static budget, which contains nothing but fixed expense amounts that do not vary with actual revenue levels.

What is a flexible budget quizlet?

What is a flexible budget? A report showing estimates of what revenues and costs should have been, given the actual level of activity for the period. -takes into account how changes in activity affect costs.

What is characteristic of an after the fact flexible budget?

An after-the-fact flexible budget allows managers to generate financial results from number of potential scenarios. (An after-the-fact flexible budget is used to compute what costs should have been for the actual level of activity.) A static budget compares actual cost with budgeted costs.

What is a flexible budget what are the objectives of a flexible budget?

A flexible budget is made with the objective of reference with the actual results for the calculation of variances between the actual and budgeted results. This helps in a transparent and accurate calculation of variances.

How a flexible budget is prepared?

Preparation of a Flexible Budget. The flexible budget uses the same selling price and cost assumptions as the original budget. Variable and fixed costs do not change categories. The variable amounts are recalculated using the actual level of activity, which in the case of the income statement is sales units.

What is flexible budget variance?

Flexible budget variance is the difference between the predictions made by a flexible budget model and the actual results. There are many causes of flexible budget variance, and they may be controllable or uncontrollable. Controllable causes include: Poor planning. Incorrect estimation of costs.

What is fixed flexible budget?

A fixed budget is a budget that doesn’t change due to any change in activity level or output level. The flexible budget is a budget that changes as per the activity level or production of units. The fixed budget is static and doesn’t change at all. A fixed budget is always fixed.

What are the two meanings of a flexible budget?

A flexible budget is a budget that adjusts or flexes with changes in volume or activity. The flexible budget is more sophisticated and useful than a static budget. (The static budget amounts do not change. They remain unchanged from the amounts established at the time that the static budget was prepared and approved.)

Is the flexible budget prepared before the master budget?

A flexible budget is a revised master budget based on the actual activity level achieved for a period. The master budget is established before the period begins for planning purposes, and the flexible budget is established after the period ends for control and evaluation purposes.

Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two budgets?

Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets? Fixed manufacturing overhead.

Which of the following items will be the same for a flexible budget and a master budget?

Total fixed costs will be the same for a flexible budget and a master budget.

When would you use a flexible budget?

Flexible budgeting can be used to more easily update a budget for which revenue or other activity figures have not yet been finalized. Under this approach, managers give their approval for all fixed expenses, as well as variable expenses as a proportion of revenues or other activity measures.

Which of the following is a characteristic of a static budget?

Which of the following is a characteristic of a static budget? It enables a firm to compute expected costs for a range of activity levels. It has two types: before-the-fact and after-the fact. It helps a company to have the knowledge of fixed and variable costs.

What type of data does flexible budget provide?

Managers use a technique known as flexible budgeting to deal with budgetary adjustments. A flexible operating budget is a special kind of budget that provides detailed information about budgeted expenses (and revenues) at various levels of output.

What is a flexible budget and how does it compare with the static budget?

A flexible budget is one that is allowed to adjust based on a change in the assumptions used to create the budget during management’s planning process. A static budget, on the other hand, remains the same even if there are significant changes from the assumptions made during planning.