May 14, 2012
Write a paper of no more than 1,050 words in which you discuss flexible budgets.
Explain the relationship between fixed and variable costs used in a flexible budget. (SAID)
Discuss the differences between static and flexible budgets and (Cynthia)
how a flexible budget lends itself to a cost-volume-profit analysis.
Intro and Conclusion/ Compile and Submit
Format your paper consistent with APA guidelines
Budgets are used by businesses and individuals to ensure that the end result is positive. A budget is basically a plan used by businesses and individuals to ensure enough money is available for current and future commitments and projects. The information presented in this paper will discuss flexible budgets, the relationship between fixed and variable costs used in a flexible budget, and the differences between static and flexible budgets and how a flexible budget lends itself to a cost-volume-profit analysis.
The Relationship between Fixed and Variable Costs Used in a Flexible Budget
A budget is a quantitative expression of a plan of action. Budgets help to coordinate and implement plans and are considered as chief devices for disciplining management planning (Horngren et al. 2008). It is very important for employees to understand the concept of budget operations. Knowing budget operations can eliminate the possibilities for incorrect information to be reported.
Businesses must choose which variables will determine their outcome. Although organizations cannot control interest rates, a company’s efficiency can determine their bottom line. Services such as canteens, cafeterias, and even janitorial services can be adjusted. Inventory optimization can be used to decrease fixed investments like storage space and transportation. Economic growth occurs through increases in productivity (McConnell & Brue, 2005). A company is better off managing what it can
References: Horngren, Charles T., Sundern, Gary L., & Stratton, William O. (2008) Introduction to Management Accounting. (14th ed.). Upper Saddle River, New Jersey: Prentice Hall. McConnell, Campbell R., & Brue, Stanley L. (2005). Economics: Principles, problems, and policies. (16th Ed.). New York: McGraw-Hill.