Question

What types of organizations use flexible budgets?

Answer 1

A flexible budget is a cost-management tool used by organisations to analyse, control and estimate overhead costs. It presents cost information at various levels of activity. It contains information about both variable and fixed costs.

Flexible budgets help an organisation understand and respond to changes in its activity levels quickly and effectively. All types of organisations can use the flexible budgeting system, but organisations which are required to adjust in accordance with changing activity levels, such as manufacturing companies, restaurants, hotels etc. are more likely to use it.