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What's the importance of flexible budget?

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What's the importance of flexible budget?
October 7th 2014 AN ACCA USER 140 Points

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+2 Votes

Purpose of any budget is A 3C DE PM (i.e. Authorization, Controlling, Coordination, Communication, Delegation, Evaluation, Planning and Monitoring)

Flexible budget recognises changing nature of costs with changes in output level.
It helps in comparison and/or forecast.
For this corresponding flexible budget is revised to give a flexed budget at desired production level.
Flexible budget revised at actual activity level is called flexed budget.
Flexed budget identifies the (variable, semi-variable, step fixed and fixed) nature of costs with the change in volume.

Source: Fixed, Flexible and Flexed Budget

October 7th 2014 AN ACCA USER 8,730 Points 1 Flag
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