2 April 2022 5:50

What does a flexible budget performance report do that a simple comparison of budgeted to actual results not do?

the flexible budget performance report clearly separates the differences between the actual results and the static planning budget that are due to changes in prices and the effectiveness with which resources are managed.

How does a flexible budget based on two cost drivers differ from a flexible budget based on a single cost driver?

How does a flexible budget based on two cost drivers differ from a flexible budget based on a single cost driver? The only difference between a flexible budget based on a single cost driver and one based on two cost drivers is the cost formulas.

Why it is important to compare the actual performance to a flexed budget performance?

It is far more informative for the business to compare performance under similar conditions. Thus the use of flexible budgets allows the fixed budget to be adjusted (flex the fixed budget) to allow for actual activity in making the comparison between actual and budgeted performance.

What is the difference between a flexible budget and an actual budget?

Variances or differences in the actual budget give a small business important information about performance elements such as overhead costs and profit. A flexible budget is a kind of budget that can easily change input variables over time. It forecast revenues and expenses with a variety of activity levels.

What does a flexible budget performance report compare?

Definition: A flexible budget performance report is a management report that compares the actual revenues and costs for a period with the budgeted revenues and costs based on the actual sales volume.

What is a flexible budget and how does it differ from a static planning budget quizlet?

A flexible budget can be adjusted to reflect any level of activity—including the actual level of activity. A static planning budget is prepared for a single level of activity and is not subsequently adjusted. You just studied 24 terms!

What may appear on a flexible budget performance report?

flexible budget: is an estimate of what revenues and costs should have been, given the actual level of activity for the period. Revenue variance: is the difference between the actual total revenue and what the total revenue should have been, given the actual level of activity for the period.

What is the purpose of flexed budget?

Budgeting Efficiency

Flexible budgeting can be used to more easily update a budget for which revenue or other activity figures have not yet been finalized. Under this approach, managers give their approval for all fixed expenses, as well as variable expenses as a proportion of revenues or other activity measures.

Why does a flexible budget report provide a better basis for evaluating performance than the report based on static budget data?

A flexible budget allows a business to see more variances than a static budget. Making a static budget involves the use of assumptions and predictions about sales, the market, economic conditions and other factors that impact a business before the budget period begins; these assumptions might not be correct.

Why is it more useful to compare actual financial results to a flexible budget instead of to a master budget?

The greatest advantage that a flexible budget has over a static budget is its adaptability. In the real world, change is real and it is constant. A flexible budget can handle that reality and better position a company for the challenges of the marketplace. Fixed versus variable expenses in a flexible and static budget.

What is a flexible report?

Flexible reporting changes the way that you can create and use your ad hoc reports. It is designed to increase the speed of creating custom reports and allow the flexibility of making immediate changes to the report easier than having to make a new or edit a previous ad hoc report using the standard method.

What is the purpose of budget performance reports?

The Profit & Loss by Budget Performance Report lines up your forecasted budget alongside your actual numbers over a specific financial period. This allows you to easily see what ‘budget items’ went as expected, which outperformed expectations, and which did not meet expectations.

What is a flexible budget?

A flexible budget adjusts based on changes in actual revenue or other activities. The result is a budget that is fairly closely aligned with actual results. This approach varies from the more common static budget, which contains nothing but fixed expense amounts that do not vary with actual revenue levels.

What are the benefits of a flexible budget?

Flexible, rolling budgets empower entrepreneurs to cope with change. This nimble planning process lets you adjust spending throughout the year; benefits include less overspending, more opportunities and speedier responses to changing market and business conditions.

What is flexible budget and its advantages?

Flexible budgets act as a benchmark by setting expenditure at various levels of activity. And the estimates of expenses developed via a flexible budget helps in comparing the actual cost incurred for that level of activity. Hence any variance identified helps in better planning and controlling.

What does flexible budget variance mean?

A flexible budget variance is any difference between the results generated by a flexible budget model and actual results. If actual revenues are inserted into a flexible budget model, this means that any variance will arise between budgeted and actual expenses, not revenues.

What type of variance results a difference between the flexible budget and the actual data?

These differences are labeled activity variances. The differences between the flexible budget and the actual performance are due to differences in selling price per unit for revenue and spending per unit for expenses.

What is true about the flexible budget?

A flexible budget is a budget that adjusts to the activity or volume levels of a company. This approach varies from the more common static budget, which contains nothing but fixed expense amounts that do not vary with actual revenue levels.

What is the flexible budget amount quizlet?

Conceptually, the flexible budget variable costs are the variable costs we expected to incur given actual sales volume. Mathmatically, flexible budget variable cost equals actual sales volume x budgted variable cost per unit. This is also equal to standard price x standard quantity allowed for actual sales volumes.

What are the two variances that make up a flexible budget variance?

A flexible budget variance is the difference between 1) an actual amount, and 2) the amount allowed by the flexible budget.

When using a flexible budget what will occur to fixed costs?

When using a flexible budget, what will occur to fixed costs as the activity level increases within the relevant range? fixed costs per unit will decrease.

Is a flexible budget prepared before the master budget?

A flexible budget is a revised master budget based on the actual activity level achieved for a period. The master budget is established before the period begins for planning purposes, and the flexible budget is established after the period ends for control and evaluation purposes.

What is flexible budget Mention the steps involved in preparing flexible budget?

Steps involved in flexible budgeting

1. Decide a range of activity for which the budget is to be prepared. 2. Determine the cost behavior pattern (Fixed, Variable and Semi-variable) for each element of costs that are included in the flexible budget.

What is master budget?

The master budget is the aggregation of all lower-level budgets produced by a company’s various functional areas, and also includes budgeted financial statements, a cash forecast, and a financing plan.

How do you do a flexed budget?

At the end of the period we look what actually happened and we compare that with what we expected to happen. And we calculate variances to explain the differences. Now important point to mention.

What is flexed budget and flexible budget?

Flexible vs flexed budget

Flexible budgeting happens at the beginning of a budgeting period—revenue, costs, and profit are forecast across a range of activity levels. With this information, a flexed budget can then be created at the end of the budget period based on the actual activity level.

How do budgets compare to actual?

In short, your budget represents the numbers your startup expects to hit, while actuals are the numbers you’ve achieved in reality. When combined with your financial forecast, this is what each represents: Budget: What your startup expects to achieve. Actuals: What your startup actually achieved.