Written Comm Flashcards
1
Q
Flexible budgets
A
adjusts for changes in volume of activity by calcu different levels of spending for VC.
Sales results are the main factor. Could also be adjusted for RM prices and interest rate changes
Primary advantage is that the budget vs actual output report identifies VARIANCES that are more relevant to actual activity
Primary disadvantage is in identifying variable v fixed costs. Many costs do not fall cleanly into one or the other. If you’re a co with highly flexible fixed costs, this budget may not be cost-effective.
requires more planning, time consuming.
