• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>

flexible budget

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › flexible budget

  • This topic has 5 replies, 2 voices, and was last updated 4 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • February 18, 2021 at 9:24 am #610836
    student999
    Participant
    • Topics: 6
    • Replies: 6
    • ☆

    Hello,

    1. are flexible budgets always prepared on marginal costing principles?

    2. if no, then when preparing under absorption costing, how to deal with the fixed cost, does it remain fixed or will it change (by calculating OAR and then charging).

    Or is it that absorption costing is just used for variance purpose and not actually for preparing the flexible budget. I have watched your lecture and did not understand why you flexed the fixed cost, perhaps the above answer will clear.

    Many thanks

    February 18, 2021 at 2:28 pm #610857
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54668
    • ☆☆☆☆☆

    1. No – I can be either marginal or absorption and (2) with absorption costing the fixed overheads remain unchanged.

    It is for variance analysis that I flex the fixed overheads using absorption costing simply to explain why the fixed overhead variances are as they are. You would not be required to flex is asked to produced a flexed budget using absorption costing, but in variance analysis it is important to understand why the fixed overheads are as they are.

    (Having said that, basic variances (including the fixed overheads variances) are rarely relevant for Paper PM (because they are all examined in Paper MA (was F2). Almost all variance questions in Paper PM are concerning the advanced variances.)

    February 19, 2021 at 7:20 am #610909
    student999
    Participant
    • Topics: 6
    • Replies: 6
    • ☆

    Sorry, I must confirm this before proceeding,

    If asked to calculate the standard cost either by marginal costing principles OR by absorption costing, the fixed overheads in the flexed/flexible budget will remain unchanged (i.e. same as in the original budget). You flexed the fixed overheads in the lectures for the sole purpose of variances (as you mentioned above)

    Good day!

    February 19, 2021 at 8:23 am #610931
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54668
    • ☆☆☆☆☆

    That is not what you asked before 🙂

    The standard cost is the cost per unit and if it is absorption costing we absorb the fixed overheads to get a fixed overhead per units and include it in the total cost per unit.

    As far as flexed budgets are concerned, that is budgeting the total costs, and the total fixed cost remains the same regardless of the costing method used.

    I only flex the fixed costs in the lecture on variances to explain why we analyse the fixed overhead variance the way that we do when it is absorption costing.

    February 22, 2021 at 3:55 pm #611328
    student999
    Participant
    • Topics: 6
    • Replies: 6
    • ☆

    Okay, I watched all the variance lectures again and came to following conclusion, are they correct

    1. if required to prepare flexed budget (either with MC or Ab. Costing) then the FC remains the same (as original budget)

    2. We just flex the FC for variance analysis only and that is why we end up calculating the
    fixed overhead volume variance.

    Hope this makes sense & sorry if repeating the questions again (in any way)

    February 22, 2021 at 5:20 pm #611348
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54668
    • ☆☆☆☆☆

    That is correct 🙂

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • The topic ‘flexible budget’ is closed to new replies.

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • kadamova.f@gmail.com on Associates (IAS 28) – PUPs – ACCA Financial Reporting (FR)
  • kadamova.f@gmail.com on Associates (IAS 28) – PUPs – ACCA Financial Reporting (FR)
  • bpop on Risk and uncertainty (part 2) – ACCA (AFM) lectures
  • kamo7293 on Financial performance – Example 2 – ACCA Financial Reporting (FR)
  • nevertoolate on CIMA BA2 – Regression analysis

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in