What are the advantages of preparing the flexible budget? The period is over, and the actual results are known. Is this just extra work for the staff? Please provide 3 advantages with proper explanation of each.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
A flexible budget consists of series budgets created for different levels of activity, revenue, and spending levels. Flexible budgets are adjusted throughout the year to account for actual sales volume, shifts in the cost of manufacturing, and pretty much any other alteration in the environment in which a business operates. For owners and managers, the ability to adapt to change is useful.
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