Explain flexible budgeting. Why is the flexible budget prepared? What quantity should be used for the...

Question

Question

Explain flexible budgeting. Why is the flexible budget prepared? What quantity should be used for the flexible budget?

Answer 1

Answer #1

Flexible budget is remaking the static budget taking actual quantity instead of budgeted quantity.

To calculate spending variance it is necessary to calculate budgeted figures as per Actual quantity so that it can be compared with actual figures.

Flexible budget is prepared to calculate Spending Variances. Flexible budget is compared with actual figures to calculate spending variances.

For preparing flexible budget actual quantity should be used.

Answer 2

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