Flexible budgets

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June 10, 2014 at 12:12 pm #175659
JOsiely
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Hello John,
I’m with this terrible doubt and I couldn’t find anything on the internet to help me.

I’m taking some examples of questions for the F2 paper and one of the questions were saying that Flexible Budgets are prepared using marginal costing techniques.
I just couldn’t understanding why, if we flexible budget for both absorption and marginal costing.

Many thanks in advance for your help.
June 10, 2014 at 2:21 pm #175676
John Moffat
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Flexible budgets are budgets that can be easily adjusted for any level of production and sales.

Since fixed overheads are, by definition, fixed in total, flexible budgets are generally prepared using marginal costing.
June 10, 2014 at 2:59 pm #175717
JOsiely
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Thanks, John!

So it means that Flexed Budget is prepared using marginal costing as well?
As we flex it in all costs according to the actual production besides fixed cost that keeps the same…

Thanks again! 🙂
June 10, 2014 at 6:08 pm #175779
John Moffat
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Yes – unless you are specifically told different in a question, then a flexed budget is marginal costing also.
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