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ACC220_WK8_Flexible_Budgets

ACC220_WK8_Flexible_Budgets - o What is a flexible budget A...

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o What is a flexible budget? A flexible budget is a budget that is more useful if it is adaptable to changed operating conditions. o What are the steps to developing a flexible budget? S TEP 1. Identify the activity index and the relevant range of activity. The activity index is direct labor hours. Management concludes that the relevant range of direct labor hours per month. S TEP 2. Identify the variable costs, and determine the budgeted variable cost per unit of activity for each cost. There are three variable costs. The variable cost per unit is found by dividing each total budgeted cost by the direct labor hours used in preparing the master budget S TEP 3. Identify the fixed costs, and determine the budgeted amount for each cost. There are three fixed costs. Since Fox desires monthly budget data, the budgeted amount is found by dividing each annual budgeted cost by 12. S
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ACC220_WK8_Flexible_Budgets - o What is a flexible budget A...

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