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Flexed budget examples

Watch this video to see examples that show the difference between fixed, flexible and flexed budgets.

Let’s look at a couple of examples to show the difference between fixed, flexible and flexed budgets.

In the video the following table is shown:

  Budget Actual
Sales volume 100 units 90 units
Sales value £1000 £900
Variable costs £500 £495
Fixed costs £200 £210
Profit £300 £285

This table is then revised in the video to the following:

  Budget Revised budget Actual
Sales volume 100 units 90 units 90 units
Sales value £1000 £900 £990
Variable costs £500 £450 £495
Fixed costs £200 £200 £210
Profit £300 £250 £285

Fixed and variable costs

If you studied the first course in the Practical Guide to Budgeting ExpertTrack – Introduction to Budgets – then you will remember fixed and variable costs from when we looked at cost behaviour. You’ll recognise that some costs shouldn’t be adjusted when producing a flexed budget: fixed costs that don’t change with activity levels. The Kaplan tutor explains this with an example in the video.

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Budget Forecasting, Costing, and Variances

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