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What does a flexible budget performance report do that a simple comparison of budgeted to actual...

What does a flexible budget performance report do that a simple comparison of budgeted to actual results does not do?

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A flexible budget refers to a budget that adjusts expenditure based on changes in actual revenue or other activities. It scale the initial budget to provide a meaningful comparison; thus informs whether the business is under or over-budget; and determine what caused business to fall or exceed below the expected gross profit. Flexible budgets provide better cost controls because it react more rapidly to adverse conditions. These are constantly updated with current data thus managers are regularly updating their projections and cost controls with current information. The differences between the actual results and the flexible budget are the variances in revenue and spending. The activity variances occurs due to the differences that arises because of the the effectiveness with which resources are managed and changes in prices (the revenue and spending variances).

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