What Is a Flexible Budget Variance?
The flexible budget difference refers to the difference between the actual amount of each project and the flexible budget amount of each project that has reached the actual production and sales volume.
Flexible budget variance
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- Chinese name
- Flexible budget variance
- Meaning
- Difference between flexible budget amounts
- Types of
- Budget variance
- Meaning
- Better planning
- The flexible budget difference refers to the difference between the actual amount of each project and the flexible budget amount of each project that has reached the actual production and sales volume.
- The flexible budget price difference is the difference between the actual unit price and the budget unit price, multiplied by the quantity of each product sold or service provided. The main purpose of calculating price differences is to exclude the effects of price changes that are often confused with other differences. The formula is as follows: [1]
- Managers can calculate the difference between the actual result and the flexible budget and between the flexible budget and the total budget, and divide the difference between the actual result and the total budget into two different types of differences, namely, flexible budget differences and operational level differences. The difference in budget is mainly due to the deviation between the actual sales price and unit cost control and the budget standard, which reflects the degree of control of input and output efficiency by managers in actual work, while the difference in operation level is mainly due to the actual business volume and total The divergence between budgets reflects the effectiveness of the work that managers do in fulfilling budget goals. Although these two kinds of differences have mutual influences, they are different in nature, and the responsible departments and corrective measures adopted are also different.