Identify and explain the primary differences between fixed and flexible budgets.

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Identify and explain the primary differences between fixed and flexible budgets.

business accounting

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Answer 1

Answer #1

ANSWER:

(1)

Fixed budgets does not change with the level of production. Which means they are static in nature. WWhereas flexible budgets change with the change in activity/production level.

(2)

To prepare, fixed budget is simple as compared to the preparation of flexible budget which is very complex.

(3)

In case of fixed budget, the variance between actual and budgeted results is very high whereas in flexible budget variance in not high.

(4)

Fixed budget is based on past data and assumptions on the other hand flexible budget is based on more realistic and practical estimates.

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Answer 2

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Identify and explain the primary differences between fixed and flexible budgets.

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