Unformatted text preview: hour your flexible budget would be Fixed costs + $10(hours of activity). A flexible budget is used for planning and controlling. It is based on other budgets information. If production needs for January requires 4,000 machine hours and the fixed costs are approx $40,000 then the flexible budget will show $40,000 + $10(4,000) = $80,000 for January. This information allows a company to budget the cost for future months. If orders for a production come in the manager can determine how many production hours are needed for that month. In turn the information from production needed can be calculated on the flexible budget to determine how much operation costs will be. This helps in assuring that funds are available and monies are not sitting unproductively....
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- Spring '10