Flexible Budget Checkpoint When it pertains to the flexible budget shows how cost vary with different rates of output or at different levels of sales volume and projects revenue based on the amount of actual

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Flexible Budget Checkpoint

When it pertains to the flexible budget shows how cost vary with different rates of

output or at different levels of sales volume and projects revenue based on the amount of actual

revenue. When it pertains to the stages to developing a flexible budget are identifying the

relevant range of activity and the activity index. In addition, to determine the budgeted variable

cost per unit of activity for each cost, a manager has to identify the variable costs, identify the

fixed costs, and determine the budgeted amount for each cost. Prepare the budget for designated

percentage increase of activity within the relevant range (Interscience, 2012). The flexible budget

report has two parts first production figures for a designated activity index, like direct labor

hours and second cost data for variable and fixed costs. The reports make available a foundation

for assessing a manager’s performance in two areas: production and cost control. In addition, the

flexible budget is the ideal budget to determine and evaluate how well a business is performing,

as it provides specific figures in various categories pertaining to the business. This means that

the flexible budget reports can be used to evaluate different types of performances, whether it is

internal employee, sales or marketing performances.

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