Budget

Hi,
These are more basic budget types and are classed as knowledge you should have brought forward from previous studies.
However, a quick run through is posted below:

A fixed budget is a financial plan that will not be altered during the budget period, irrespective of any changes in actual activity levels/ volumes in the period. This is sometimes referred to as a static budget.

A flexed budget adjusts or flexes the static budget to reflect actual output volumes. For example the original budget figures may have been based on an original plan of producing 20,000 units. If we actually produce 35,000 units then unless we reflect this in our budget figures- our comparison to actuals will be meaningless.

A Rolling budget is kept continuously up to date by adding on another accounting period (e.g. a quarter) as soon as the current accounting period is completed. The budget will usually stretch for one year – so for example when quarter 1 in year 1 is done- a rolling budget will be updated and figures for quarter 1 – year2 will be added.

Feedforward and feedback are control systems for which budgeting can be used.

Feedback measures actual results against the budgeted plan (via variance analysis) this allows management to take corrective action to improve future performance.

Feedforward is more pro-active in its approach and aims to solve or avoid issues by using forecasts to warn management of early problems. Rather than waiting until the end of a period to compare results – here the budget is compared to updated forecast figures and so management can take action before large variances occur.

Hope that helps