flexible budget

Topics: Budget, Budgets, Management accounting / Pages: 5 (1285 words) / Published: Sep 1st, 2014
“Team B” Flexible Budget
Tenecia Blevins, Zokieya Canida, Robert Edmonds, Carl Hignite, Harold Smith
Accounting - ACC/561
September 1, 2014
Myrtle Clark

Flexible Budget
Organizations in today’s ever-changing global market make use of budgeting to help measure performance, plan, and control its business operations. Organizational leaders make use of flexible budgets to help take into consideration; various uncertainties that may emerge after business operations commence. According to Kimmel, Weygandt, and Kieso (2011), organizations additionally make use of flexible budgets to help them address changes in the volume of activity as well as for performance evaluation tools when used in conjunction with the static budget. Within the subsequent paragraphs “Team B,” will attempt to answer what are the advantages of a flexible budget versus the static budget. How the flexible utilizes a contribution format. How a flexible budget is useful for variance analysis. Finally “Team B” will attempt to provide information pertaining to the types of variances computed when making use of a flexible budget.
Advantages of a flexible budget over to a static budget
The distinct difference between a flexible and static budget is that a flexible budget projects budget data for various levels of activity, whereas the static budget is a projection of budget data at one level of activity (Kimmel et al., 2011). The flexible budget uses the master budget as its basis. The flexible budget is a series of static budgets at different levels of activity. It recognizes that the budgetary process is beneficial if it is adaptable to changed organizational operating conditions. (Kimmel et al., 2011). A static budget remains at one amount no matter the volume of the activity the company foresees, because it projects a fixed level of input, and output. The flexible budget can help an organization continuously recalculate its expenses depending on the revenue incurred

References: Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2011). Accounting: Tools for business decision making (4th ed.). NJ: John Wiley & Sons. Accounting Tools. (2014). Retrieved from http://www.accountingtools.com/questions-and-answers/what-is-a-flexible-budget.html Thompson, V. (2008). The Advantages of a Flexible Budget. Retrieved from: http://people.opposingviews.com/advantages-flexible-budget-1314.html Velmurugan, M. S. (2010). The Success And Failure Of Activity-Based Costing Systems. Journal Of Performance Management, 23 (2), 3-33. Warren, C., & Reeve, J. (2011). Financial and Managerial Accounting. New York: Cengage Learning

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