Admin Table of Contents
- 1 What are the advantages and disadvantages of using a flexible budget versus a static budget?
- 2 What are strengths and weaknesses of a fixed budget?
- 3 What are the advantages and disadvantages of using a flexible budget?
- 4 What is the major deficiency of static budget performance report?
- 5 What are the problems of static budget performance evaluation?
- 6 What is the advantage of a static budget What is the limitation of a static budget?
What are the advantages and disadvantages of using a flexible budget versus a static budget?
The greatest advantage that a flexible budget has over a static budget is its adaptability. In the real world, change is real and it is constant. A flexible budget can handle that reality and better position a company for the challenges of the marketplace. Fixed versus variable expenses in a flexible and static budget.
What are strengths and weaknesses of a fixed budget?
The benefits to a fixed budget include greater stability, better savings, and easier future planning, while the disadvantages include reduced flexibility. A fixed budget does not allow any room for extra, unforeseeable monetary needs.
What is static planning budget?
A static budget is a budget that uses predicted amounts for a given period prior to the period beginning. The unique aspect of a static budget is that it does not change regardless of deviations in revenue and expenses.
What is an advantage of a static budget?
A static budget helps to monitor expenses, sales, and revenue, which helps organizations achieve optimal financial performance. By keeping each department or division within budget, companies can remain on track with their long-term financial goals.
What are the advantages and disadvantages of using a flexible budget?
Pros and Cons of Flexible Budgeting
| Pros | Cons |
|---|---|
| Better enables businesses to pursue new opportunities and mitigate risk | Predictions have a shorter lifespan — months rather than quarters |
| More accurately reflects the state of finances | Less accountability to adhere to original budget |
| Accounts for unexpected expenses |
What is the major deficiency of static budget performance report?
A deficiency with the static budget is the lack of flexibility to adjust to unexpected changes.
What are the advantages and disadvantages of flexible budget?
What is Unfavourable in standard costing?
An unfavorable variance is the opposite of a favorable variance where actual costs are less than standard costs. Rising costs for direct materials or inefficient operations within the production facility could be the cause of an unfavorable variance in manufacturing.
What are the problems of static budget performance evaluation?
The greatest disadvantage of the static budget is its lack of flexibility. If a company establishes a budget based on a certain level of sales volume and that volume increases, it can’t allocate additional resources to keep up.
What is the advantage of a static budget What is the limitation of a static budget?
Also, because static budgets don’t have built-in wiggle room, they can help companies control their costs and make smart spending decisions. The greatest disadvantage of the static budget is its lack of flexibility.