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  • Chapter 7 Flexible Budgets, Direct-cost Variances, And Management Control

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The flexible budget is compared to actual costs, and the difference is shown in the form of two variances. The labor rate variance focuses on the wages paid for labor and is defined as the difference between actual costs for direct labor and budgeted costs based on the standards.

The following steps can help you create a budget. Calculate your earnings. Pay your bills on time and track your expenses. Set financial goals. Review your progress.

A flexible budget is one based on different volumes of sales. A flexible budget flexes the static budget for each anticipated level of production. This flexibility allows management to estimate what the budgeted numbers would look like at various levels of sales.

Recognize fixed cost The first step to creating a flexible budget is recognizing your fixed costs. These are costs that remain stable, notwithstanding a company's performance. Some examples of fixed expenses are: Mortgage, loan payments, and rent: The amounts established for these monthly costs are usually consistent.

What is a flexible budget? A flexible budget is a budget that adjusts to a company's activity or volume levels. Unlike a static budget , which doesn't change from the amounts established when the company creates the budget, a flexible budget continuously changes with a business' cost variations.

What is a Flexible Budget Variance? A flexible budget variance is a calculated difference between the planned budget and the actual results. In the example above, the company has set a target of 85% production capacity. The budgeted or planned sales volume of 212,500 units yields a $740,625 profit.

1 Step 1: Identify fixed and variable costs. ... 2 Step 2: Calculate the budgeted variable cost per unit. ... 3 Step 3: Prepare the flexible budget formula. ... 4 Step 4: Apply the flexible budget formula to different activity levels. ... 5 How to choose the best activity level for a flexible budget.

A flexible budget is a budget that adjusts for changes in the level of activity or output. Unlike a static budget, which is based on a fixed level of activity or output, a flexible budget is designed to be adaptable to changes in sales volume, production volume, or other measures of business activity.

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Form Packages
Adoption
Bankruptcy
Contractors
Divorce
Home Sales
Employment
Identity Theft
Incorporation
Landlord Tenant
Living Trust
Name Change
Personal Planning
Small Business
Wills & Estates
Packages A-Z
Form Categories
Affidavits
Bankruptcy
Bill of Sale
Corporate - LLC
Divorce
Employment
Identity Theft
Internet Technology
Landlord Tenant
Living Wills
Name Change
Power of Attorney
Real Estate
Small Estates
Wills
All Forms
Forms A-Z
Form Library
Customer Service
Terms of Service
DMCA Policy
About Us
Blog
Affiliates
Contact Us
Privacy Notice
Delete My Account
Site Map
All Forms
Search all Forms
Industries
Forms in Spanish
Localized Forms
Legal Guides
Real Estate Handbook
All Guides
Prepared for You
Notarize
Incorporation services
Our Customers
For Consumers
For Small Business
For Attorneys
Our Sites
US Legal Forms
USLegal
FormsPass
pdfFiller
signNow
airSlate workflows
DocHub
Instapage
Social Media
Call us now toll free:
1-877-389-0141
As seen in:
  • USA Today logo picture
  • CBC News logo picture
  • LA Times logo picture
  • The Washington Post logo picture
  • AP logo picture
  • Forbes logo picture
© Copyright 1997-2025
airSlate Legal Forms, Inc.
3720 Flowood Dr, Flowood, Mississippi 39232