Checkpoint Flexable budgets

Checkpoint Flexable budgets - Some information that you can...

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A flexible budget is a budget that shows data from various level of activity. A flexible budget is used when you want to be able to see what would happen is you sold x amount of product compared to y amount of product, and what would your profit level be and how can you achieve your goals. In developing a flexible budget you first need to identify the activity index and the relevant range of activity that you want to budget. Next, you would have to identify your variable cost and determine the variable cost per unit of activity for each cost. Then, you need to identify the fixed costs, and determine the budgeted amount for each cost. Then finally prepare the budget for the selected increments of activity in the relevant range.
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Unformatted text preview: Some information that you can find a flexible budget are the production data for that certain index of information such as direct labor cost. Then you will have the cost data variables and the fixed cost that go into a company. The information found on a flexible budget is used to evaluate managers based on their production control making sure that the direct labor is coming in under budget. Secondly, the managers are evaluated on the cost control making sure that they are getting the lowest prices for material and making sure that the company can sell the cost of good for a certain percentage point for profit....
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