What is the primary difference between a static budget and a flexible budget?
In the case of the Fixed Budget, there is no change in the budget of the company because of the change in the level of activity or the output level, whereas, in the case of the Flexible Budget, changes happen in the budget of the company whenever there is any change in the level of
activity or the output level. There are two kinds of budgets in cost accountingCost accounting is a defined stream of managerial accounting used for ascertaining the overall cost of production. It measures, records and analyzes both
fixed and variable costs for this purpose.read more that differ in scope, nature, and usefulness. We call these fixed budgets and flexible budgets.
You are free to use this image on your website, templates, etc., Please provide us with an attribution linkArticle Link to be Hyperlinked Fixed vs Flexible Budget Infographics You are free to use this image on your website, templates, etc., Please provide us with an attribution linkArticle Link to be Hyperlinked Key Differences Between Fixed and Flexible Budget
Comparative Table
ConclusionsBy comparing the fixed and flexible budgets, we get an idea about which one is more useful and applicable. Even if a fixed budget is elementary to prepare, ideally, it’s not an excellent budgeting method, to be precise, because fixed budgeting doesn’t leave room for fluctuations. On the other hand, flexible budgeting is very much adjustable to business situations. As a result, the business doesn’t need to incur losses. That’s it’s prudence to use flexible budgeting no matter what scale of business you’re in. Recommended ArticlesThis has been a guide to the Fixed vs. Flexible Budget. Here we discuss the top differences between Fixed and Flexible Budgets and infographics and a comparative table. You may also have a look at the following articles for gaining further knowledge in Corporate Finance –
What is the main difference between static and flexible budgets?Static vs Flexible Budgets
Static Budget - the budget is prepared for only one level of production volume. Also called a Master budget. Flexible Budget - a summarized budget that can easily be computed for several different production volume levels. Separates variable costs from fixed costs.
What is the difference between a flexible budget and a planning 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.
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