Flexible budgeting

What is flexible budgeting?

Changed to allow for the behaviour of variable costs at different levels. Takes into account fluctuations in the bus level of sales

What does the budget do?

Adjusts the budgeted figures in line with the actual sales volume achieved

Why is the budget allowing for changes in sales volume an advantage?

Much more suitable for organisations where demand fluctuates with the bus cycle

Eg - if demand rises by 10% then the budget increases by 10%

Why is making sure the bus has enough finance to meet changing demand an advantage?

Don’t miss out on potential sales opportunities

Why is a flexible budget generally being prepared for evaluation and control purposes a disadvantage?

Regularly adjusted

Plan is regularly reviewed and changed

Better for seeing where the changes are happening