Quick Answer: What Best Describes A Flexible Budget?

What are 5 expenses that are flexible?

Flexible expense examples include groceries, dining out, entertainment, and even utilities.

Learn how you can master your personal finances by cutting back on these expenses and putting more money where it matters..

What is commonly considered a flexible expense?

Entertainment. Commonly considered a flexible expense.

What is the difference between fixed and flexible expenses?

Whats the difference between “fixed” and “flexible” expenses? Fixed: expenses that are the same every month. … Flexible: expenses that can change from month to month.

How do you prepare a flexible budget performance report?

To prepare a flexible budget performance report, you identify key figures based on the flexible budget formula. If your company’s formula says, for example, that COGS should be 25 percent of sales and sales were $75,000 for the period, COGS should be $18,750.

What is the difference between a static and flexible budget How are flexible budgets prepared?

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.

What is a flexible budget?

A flexible budget is a budget that adjusts to the activity or volume levels of a company. Unlike a static budget, which does not change from the amounts established when the budget was created, a flexible budget continuously “flexes” with a business’s variations in costs.

What are the benefits of a flexible budget?

The biggest advantage to a flexible budget is that it more accurately reflects the state of your finances. The alternative, static budgeting, can’t account for unexpected expenses or changing income. A flexible budget will help you track where you can adjust spending each month.

What does a flexible budget look like?

A flexible budget is a budget that adjusts or flexes with changes in volume or activity. … For costs that vary with volume or activity, the flexible budget will flex because the budget will include a variable rate per unit of activity instead of one fixed total amount.

What are the three types of flexible budget variances?

Favorable variances arise when actual results exceed budgeted. Unfavorable variances arise when actual results fall below budgeted. Favorable profit variances arise when actual profits exceed budgeted profits. Unfavorable profit variance occurs when actual profit falls below budgeted profit.

Which responsibility centers generate both revenues and costs?

A profit center is a responsibility center having both revenues and expenses.

What is management by exception quizlet?

Management by Exception. means that managers focus attention on the most significant differences between actual costs and standard costs and give less attention to areas where performance is reasonably close to standard. Cost Variance.

What is flexible budget example?

A flexible budget adjusts the master budget for your actual sales or production volume. For example, your master budget may have assumed that you’d produce 5,000 units; however, you actually produce 5,100 units.

What are the 4 types of expenses?

You might think expenses are expenses. If the money’s going out, it’s an expense. But here at Fiscal Fitness, we like to think of your expenses in four distinct ways: fixed, recurring, non-recurring, and whammies (the worst kind of expense, by far).

What is a fixed budget?

A budget that does not take into account any circumstances resulting in the actual levels of activity achieved being different from those on which the original budget was based. Consequently, in a fixed budget the budget cost allowances for each cost item are not changed for the variable items. Compare flexible budget.

What is a flexible budget quizlet?

Flexible budget. A report showing what revenues and costs should have been at actual level of activity for the period.

What are three types of flexible expenses?

There are three major types of expenses we all pay: fixed, variable, and periodic.

When budgeted amounts are set at reasonable and achievable levels?

$26,250. When budgeted amounts are set at reasonable and achievable levels: Failure to stay within the budget is viewed as an unacceptable level of performance.

What companies use flexible budgets?

Organizations such as restaurants, manufacturing companies and even hotels use flexible budget because these budgets respond quickly to keep the company of the organization profitable. It allows these companies or organizations to meet the changing everyday needs of the company’s business activities.

What causes the difference between static and flexible budget amounts?

A flexible budget calculates budgeted revenue and budgeted costs based on the actual output in the budget period. The only difference between the static budget and the flexible budget is that the static budget is prepared for the planned output, whereas the flexible budget is prepared based on the actual output.