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Flexible Budget:
A flexible budget is the budget which is prone to changes as per the requirement of allocation of funds according to the volume of transactions over a period of time. The variable cost is an integral regulator of a flexible budget, because the fixed costs are always stagnant irrespective of the operations undergone by the business. Therefore, the variable costs undergo change with the dynamics of the operations of business.
Flexible Budget Performance Report:
A flexible budget performance report is the analysis of deviations between the budget
To prepare: Flexible budget performance report.
Explanation of Solution
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B Company |
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Budgeted Performance Report |
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For the month ended May 31, 20XX |
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Particulars |
Flexible Budget ($) |
Actual Budget ($) |
Net Variance ($) |
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Sales(105,000 units) |
1,300,000 |
1,275,000 |
25000 |
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Variable costs |
750,000 |
712,500 |
37500 |
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Contribution |
550000 |
562,500 |
12500 |
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Fixed costs |
300,000 |
300,000 |
- |
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Net Income |
250,000 |
262500 |
12500 |
Hence, the net income of the firm is increased by 12500 from the projected budget.
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