What is a flexible budget dispersion?

Flexible budget scattering is the difference between the amount that society plans to spend or earn over a specified period of time, and the amount that actually spends or earns. The difference or difference may be either a positive number, which means that the costs exceed the budget or income exceeded or the negative number, the costs are lower than expected, or income is lower than planned. Managers and investors could use flexible budget scattering to measure not only society but also various managers.

When the actual performance of the company or department differs from what was planned for a month, quarter or even a year, measuring flexible budget scattering helps with cost control. Trying to apply static budget standards does not work if the expected costs or earnings differ, preventing the company's profitability or performance assessment. Without an accurate way of measurement of performance, administration cannot know whether the correquenic in society does notBO at the Ministry's events are necessary.

For a flexible work budget, the company must first have a static or solid budget. Statical budget plans for a certain number of income and a certain amount of expenditure based on the market conditions of the management and performance of the company. Looking at the scattering managers or investors, they still use the same fixed costs and value of income as set out in the static budget. If the cost or income values ​​in the static budget were variable, the flexible budget must also use variable data for these costs or income values.

differences in the actual costs or earnings of the company compared to those that have been screened by a static budget provide valuable performance information. For example, the company may seem to make more money by selling a higher number of units within a month or a quarter than wjak was originally expected in Statthe budget. However, the flexible budget scattering may show that the amount obtained for the unit was lower than expected, which could lead to the company to earn less net income from a higher number of sales.

Evaluation of the performance of an individual manager using a flexible budget scattering works well only if the information is used for the evaluation. Any budget information, whether from static or flexible budgets, must be below the scope of responsibility for the evaluation of the manager. The higher the level or authority of the manager in society, the more of the total budget deviations of the company should be used to measure its performance.