The Benefits of Using a Versatile Budget Plan

What is a versatile budget plan?

A versatile budget jobs spending plan data for various levels of activity. The flexible spending plan is a series of fixed budget plans at various levels of activity. The versatile budget plan recognizes that the budgetary procedure is better if it is versatile to changed operation conditions. Flexible budget plans can be gotten ready for each of the kinds of spending plans include in the master spending plan, so depending upon your specific service you will have various budgets in your flexible budget.

What are the steps to establishing a flexible spending plan?

The flexible budget uses the master budget as the basis. To develop the flexible budge the following steps need to be taken: 1)Identify the activity index and the relevant range of activity 2)Identify the variable costs, and determine the budgeted variable cost per unit of activity for each cost. 3)Identify the fixed costs, and determine the budgeted amount for each cost. 4)Prepare the budget for selected increments of activity within the relevant range.

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• What information is found on a flexible budget report?

Flexible budget reports are a type of internal report. The budget report consists of two sections 1) production data for a selected activity budget such a direct labor hours and 2) cost data for variable and fixed costs. The report provides a basis for evaluating a manager’s performance in two areas: production control and cost control. Flexible budgets are widely used in production and service departments

How is that information used to evaluate performance?

At the end of a budgeted period, you need to find out if your planned expenditures fell in line.

The flexible budget is the budget with figures that are based on actual output. It is then compared to a company’s static budget to get variances between what level of spending was expected and what actually occurred.