Flexible Budget Performance Report

Learning Outcomes

  • Prepare a flexible budget performance report

For the flexible budget performance report, the flexible budget is prepared using the ACTUAL level of production instead of the budgeted activity. The difference between actual costs incurred and the flexible budget amount for that same level of operations is the budget variance. Budget variances can indicate a department’s or company’s degree of efficiency since they emerge from a comparison of what was with what should have been. The performance report shows the budget variance for each line item. We’re preparing this performance report on a summary basis for an entire year, but a company might prepare this kind of report using more detail and presenting it on a monthly basis.

RockChuck Company
Flexible Budget Performance Report
Month Ended September 30, 2021
Actual Results Flexible Budget Variance F or U Flexible Budget Sales Volume Variance F or U Static Budget
Units 180,000           180,000         172,405
Sales Revenue $6,030,000 $   (90,000) U $6,120,000 $   258,230 F $ 5,861,770
Variable Costs 3,420,000 $     57,600 U 3,362,400 $   141,875 U 3,220,525
Contribution Margin 2,610,000 $  (147,600) U 2,757,600 $   116,355 F 2,641,245
Fixed Costs 2,650,000 $    197,306 U 2,452,694 $         – N/A 2,452,694
Operating Income $ (40,000)Double line $  (344,906) UDouble line $  304,906Double line $   116,355 FDouble line $   188,551Double line


The overall budget was unfavorable:

Description Total
Price/Cost Variance $  (344,906)
Volume Variance 116,355
Overall budget variance $  (228,551)Double line unfavorable


Before finishing this section, let’s take a look at one other example of a flexible budget report:

You can view the transcript for “flexible budget variance” here (opens in new window).

Now, check your understanding of the budget performance report.

Practice Question