{"id":1092,"date":"2021-04-14T01:11:12","date_gmt":"2021-04-14T01:11:12","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/?post_type=chapter&#038;p=1092"},"modified":"2021-08-15T20:35:40","modified_gmt":"2021-08-15T20:35:40","slug":"introduction-to-flexible-budget-2","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/chapter\/introduction-to-flexible-budget-2\/","title":{"raw":"Introduction to Flexible Budget","rendered":"Introduction to Flexible Budget"},"content":{"raw":"<h2>What you will learn to do: prepare a flexible operating budget<\/h2>\r\n<img class=\"size-medium wp-image-1562 alignright\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5469\/2021\/01\/12224637\/adeolu-eletu-unRkg2jH1j0-unsplash-300x199.jpg\" alt=\"Man looking at analytics on a tablet\" width=\"300\" height=\"199\" \/>Managers use a technique known as flexible budgeting to deal with budgetary adjustments. A flexible operating budget is a special kind of budget that provides detailed information about budgeted expenses and revenues at various levels of output, versus a static budget that assumes a particular level of output with no other options.\r\n\r\nIn any budget, the difference between the actual results and the budgeted amount is known as the variance. In a flexible budget, the variance is often split into two categories: the flexible variance and the volume variance.\r\n\r\nThe flexible budget variance isolates the difference between actual results and budget projections based on larger than expected or less than expected sales price (for revenues) and costs (for expenses).\r\n\r\nThe volume variance isolates the difference between actual results and budget projections due to falling short or exceeding sales volume and therefore production.\r\n\r\nWhen you are done with this section, you will be able to:\r\n<ul>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Prepare a flexible budget<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Compute price and cost variances<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Compute volume variances<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Prepare a flexible budget performance report<\/li>\r\n<\/ul>\r\n<h3>Learning Activities<\/h3>\r\nThe learning activities for this section include the following:\r\n<ul>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Flexible Budget<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Flexible Budget<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Flexible Budget Variance<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Flexible Budget Variance<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Sales Volume Variance<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Sales Volume Variance<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Performance Report<\/li>\r\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Performance Report<\/li>\r\n<\/ul>","rendered":"<h2>What you will learn to do: prepare a flexible operating budget<\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-1562 alignright\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5469\/2021\/01\/12224637\/adeolu-eletu-unRkg2jH1j0-unsplash-300x199.jpg\" alt=\"Man looking at analytics on a tablet\" width=\"300\" height=\"199\" \/>Managers use a technique known as flexible budgeting to deal with budgetary adjustments. A flexible operating budget is a special kind of budget that provides detailed information about budgeted expenses and revenues at various levels of output, versus a static budget that assumes a particular level of output with no other options.<\/p>\n<p>In any budget, the difference between the actual results and the budgeted amount is known as the variance. In a flexible budget, the variance is often split into two categories: the flexible variance and the volume variance.<\/p>\n<p>The flexible budget variance isolates the difference between actual results and budget projections based on larger than expected or less than expected sales price (for revenues) and costs (for expenses).<\/p>\n<p>The volume variance isolates the difference between actual results and budget projections due to falling short or exceeding sales volume and therefore production.<\/p>\n<p>When you are done with this section, you will be able to:<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Prepare a flexible budget<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Compute price and cost variances<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Compute volume variances<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Prepare a flexible budget performance report<\/li>\n<\/ul>\n<h3>Learning Activities<\/h3>\n<p>The learning activities for this section include the following:<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Flexible Budget<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Flexible Budget<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Flexible Budget Variance<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Flexible Budget Variance<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Sales Volume Variance<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Sales Volume Variance<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Reading: Performance Report<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">Self Check: Performance Report<\/li>\n<\/ul>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-1092\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Introduction to Flexible Budget. <strong>Authored by<\/strong>: Joseph Cooke. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li><strong>Provided by<\/strong>: Unsplash. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/unsplash.com\/photos\/unRkg2jH1j0\">https:\/\/unsplash.com\/photos\/unRkg2jH1j0<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/about\/cc0\">CC0: No Rights Reserved<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t 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