Flexible Budgets
ACC/543
May 14, 2012
Write a paper of no more than 1,050 words in which you discuss flexible budgets.
Explain the relationship between fixed and variable costs used in a flexible budget. (SAID)
Discuss the differences between static and flexible budgets and (Cynthia)
how a flexible budget lends itself to a cost-volume-profit analysis.
Intro and Conclusion/ Compile and Submit
Format your paper consistent with APA guidelines
Flexible Budgets
Budgets are used by businesses and individuals to ensure that the end result is positive. A budget is basically a plan used by businesses and individuals to ensure enough money is available for current and future commitments and
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Flexible budgets are prepared by classifying the costs according to their variable nature.
How a Flexible Budget Lends Itself to a Cost-Volume-Profit Analysis
The budget that symbolizes sales, the fixed costs, and variable costs for contrasting standards of production is the flexible budget. For costs that are constantly the same amount no matter how different standards or levels are, they are the fixed costs. Let’s use a factory’s rent for example. The fixed cost for that building would have to change if the magnitude changed because of acquirement of some added fixed assets. The fixed cost per unit will expand or plunge if the production level goes up or down. On the other side, the variable costs can adapt in correspondence to the levels of composition. For example, direct material, if the production number reduces, the variable costs would be a smaller amount. In an opposite manner, if the production level goes up, expands, the variable costs total, would go up as well. No matter what the level of production is, the variable costs per unit are still continuous. Some of the expenditures aren’t full variables. The reason some are semi-variables, specific sections of the cost are fixed and don’t change, but the excess section of the cost can differ depending on the proportion to the production. To explain more in detail, a sales manager’s salary is fixed but his commission he makes is a variable. Fixed costs and variable cost are similar to one another when it
The main reason behind it is that the variance analysis of materials, labor, and overhead indicates the difference between original budget and actual sales/amount. It explains that the management should make changes in the budgets in order to diminish the chances of failure (Epstein & Jermakowicz, 2010). Moreover, the company should make changes in its all budgets like production budget, sales budget, manufacturing budget, selling budget and general & administrative. These changes would be helpful to reduce the difference between the actual and projected sales of the firm.
3. Explain two methods that can be used in order to identify realistic estimations when developing a budget. [2.2]
|2.1 Explain the purpose of agreeing the format in which a budget will be presented |Question 1 Page 2 |
27. A budget is a specific plan of how a person or family will spend their money.
The budget is a plan of how to spend available funds wisely, and entails a list of all expected revenues and expenses. The budget is compiled annually and marks the beginning and end of the fiscal year. While the primary burden of the budget lies with the finance department, it is the responsibility of all faculty affected by budgetary practices to provide insight into the projected financial future of the school. The goal and evidence of a successful budget is to have the actual numbers of the financial year equal or come close to the estimated
Budgeting is the systematic method of allocating financial, physical, and human resources to achieve an organization’s strategic goals. Budgets are utilized by for-profit and non-profit organizations to monitor the progress towards the goals, assist in the control of spending, and help predict cash flow for the organization.
Budget is the major financial and economic statement. The role of the budget is to keep track of the money coming in and the money going out. It is essential part of running any business effectively. It can help make a short and long term projections about financial situation, avert a financial crisis and plan for major financial changes.
All the costs by a company can be broken into two categories, fixed costs and variable costs. Costs that are independent of output are called fixed costs. Fixed costs remain constant throughout the relevant range and are usually considered sunk for the relevant range. Buildings and machinery are included inputs that cannot be adjusted in the short term. They are only fixed in relation to the quantity of production for a certain time period. The cost of all inputs is variable, in the long run.
Budgeting is crucial in the well-being of a company especially the financial health status of a company. In fact, no professionally managed firm would fail to budget, since the budget establishes what is authorized, how to plan for purchasing contracts and hiring, and indicates how much financing is needed to support planned activity. It is routine for a company to budget for its expenses. Expense budgets act as a guideline of how much revenue a company would require keeping the activities running. It is used to set the company’s targets for a certain period.
“It’s clearly a budget. It’s got a lot of numbers in it” (George W. Busch 2005). This definition of a budget can be supplemented using the Oxford dictionary, which states that a budget is an estimate of income and expenditures for a set period of time. Nowadays almost every business uses budgets and managers use them as a tool in order to set targets. In other words managers can, with the use of budgets, explain in a financial way what are the
The essential relationship between fixed and variable costs is the same whether the budget is static or flexible. The key is that in the flexible budget, both fixed and variable costs are subject to change. In most cases,
The traditional principles and practices of educational budgeting have come a long way and have evolved into the sophisticated system that we recognize and understand today. It is not just a document of receipts and expenditures, but it is a process used to govern fiscal behavior, set goals and meet program objectives. A working definition of a budget is a financial plan that involves four components such as planning, receiving funds, spending funds and evaluating the end results in a limited time frame. Educational budgeting is a way of defining and prioritizing needs, setting goals and organizing those needs and goals into objectives to create a viable education program defined by its financial plan.
Budget is a comprehensive business plan for procuring and appropriating a firm’s financial resources over a specified time period.
A budget is a financial statement which is an estimate of income and expenditure of a set period of time, which may include planned revenues, expenses, assets, liabilities and
Budget and budgetary control practices are undeniably indispensable as organizations routinely go about their business activities and operations. These organizations are constantly on the alert on how actual levels of performance agree with planned or budgeted performance. A budget expresses a plan in monetary terms. It is prepared and approved prior to a particular budgeted period and explicitly may show the income, expenditure and the capital to be employed by organizations in achieving their goals and objectives.