Budgeting is a tool used by management for performing the functions of planning, coordinating, and...

Question

Budgeting is a tool used by management for performing the functions of planning, coordinating, and controlling operations of a business. Our textbook, Managing Accounting Concepts,describes 2 main types of budgeting: static budgets and flexible budgets.

Respond to the following in a minimum of 175 words:

Differentiate between the 2 types of budgets.
Provide an example of the type of business or company that would benefit from using a flexible budget.
Provide support for your business selection and include the advantage for using a flexible budget over a static budget.

Khushboo · Accepted Answer

Difference between flexible and static budget:
Flexible budget is the budget which can be changed if the assumptions or level of activities are changed whereas under static budget it cannot be changed even if there are minor changes in assumptions or activity level. Further the cost cannot be estimated accurately in static budget whereas under flexible budget it can be ascertained with more accuracy.

Budgeting is a tool used by management for performing the functions of planning, coordinating, and controlling operations of a business . Our textbook, Managing Accounting Concepts ,describes 2 main...

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