Flexed budget examples
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.
Budget Forecasting, Costing, and Variances
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