Author Topic: Static Vs. Flexible Budgets  (Read 1296 times)

Suraya Yasmen

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Static Vs. Flexible Budgets
« on: September 29, 2018, 01:53:18 AM »
Static Vs. Flexible Budgets

There are two major types of budgets:
                1.Static budgets and
                2.Flexible budgets.
  A static budget remains unchanged over the life of the budget. Regardless of changes that occur during the budgeting period, all accounts and figures originally calculated remain the same.

A flexible budget has a relational value to certain variables. The dollar amounts listed on a flexible budget change based on sales levels, production levels or other external economic factors.

Both types of budgets are useful to management. A static budget evaluates the effectiveness of the original budgeting process, while a flexible budget provides deeper insight into business operations.