| B) is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels. C) the flexible budget is prepared for a single level of activity, while a static budget is adjusted for different activity levels. D) the static budget is constructed using input from only upper-level management, while a flexible budget obtains input from all levels of management. E) the flexible budget is constructed using input from only upper-level management, while a static budget obtains input from all levels of management. Show The Correct Answer for the given question is Option B) is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels. Answer ExplanationStatic Budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels.Static budgets reflect anticipated inputs and outputs calculated before the period in question begins. Static budgets do not change regardless of increases or decreases in sales or production volumes, but are forecasts of revenue and expenses over a specific period. However, the actual results after the fact can differ quite a bit from the numbers that are derived from static budgets. Accounting, finance professionals, and management teams use static budgets to gauge the financial performance of a company over time.Static Budgets allow the company to plan output and input. The budget, in turn, assists the company in managing cash flow, income, and expenses. It allows the company to monitor both the departments’ day-to-day work and their long-term planning. Most stakeholders can use this budget to ensure monetary control. Spending should be matched with revenues, so that overspending can be prevented. Flexible budget refers to a budget that varies based on the activity or volume of a company. As opposed to a static budget, which does not change from its amounts when it is first created, a flexible budget constantly “flexes” to accommodate any variations in a business’s costs over time. Using this type of budgeting, a company can plan for increase or decreases in monetary requirements by using variable rates per unit as opposed to a fixed amount. A percentage of revenue rather than static figures is usually used for this type of budget since it is based on changes in revenue rather than static numbers. A flexible budget may, for example, allocate 25% of a company’s revenue to salaries rather than $100,000 in a given year. It takes into account any changes in the company’s revenue and staff that may occur throughout the year. Static BudgetFlexible BudgetStatic Budget does not changes with actual volume of output.Flexible Budget does not changes with actual volume of output.Static Budget cannot ascertain costs in case of change in circumstances.Flexible Budget can ascertain costs in different levels of activities.Static budget is prepared without classifying the costs according to their variable nature.Flexible budget is prepared by classifying the costs according to their variable nature.In case of Static Budget , it is difficult to forecast accurately the results in it.In case of Flexible Budget , the impact of various expenses on the operational aspect of the business can be clearly shown.Following are the main differences between static and flexible budget: Start A Writing Career And Live The Adventure You May Like Get Paid To Write So You're Free To Live Training Videos For Microsoft Azure Exam AZ-300 Certification Exam What is difference between static budget and flexible budget?Static budgets are often used by non-profit, educational, and government organizations. Unlike a static budget, a flexible budget changes or fluctuates with changes in sales and production volumes.
What is the difference between a static budget and a flexible budget quizlet?What is the primary difference between a static budget and a flexible budget? -The static budget contains only fixed costs, while the flexible budget contains only variable costs. -The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels.
What is the difference between planning budget and flexible budget?In a static budget, the budgeted prices and the budgeted quantities remain fixed and hence the budgeted cost does not change with the actual level of production. On the other hand, in a flexible budget only standard rates or prices of resources such as materials, labor etc.
Which is better a flexible or static budget?A flexible budget is a budget that is adjusted (flexes) for various output levels, unlike the static budget which only budgets for a single output level. It is a better tool for evaluating costs because it allows management to compare actual output to a budget with the same level of activity.
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