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Hello sir, can u plz let me know what type of budget is this?
because it changes according to changes of level of output/ units… I think its Flexed budgeting. am i right?
“Managers use the previous year results as a starting point when drafting the budgets and increase the variable costs in line with any anticipated growth in volumes”
thanks alot sir
That is an incremental budget: last year’s adjusted for anticipated changes in volume and inflation.
A flexed budget is adjusted retrospectively in the light of actual activity. So, if 12,000 units were made instead of the budgeted 10,000 then the material, labour and variable expense budgets would be increased by x1.2.
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