What is the difference between a static and flexible budget?
Difference between static and flexible budget
Basis of comparision | Fixed budget | Flexible budget |
Meaning | remains constant regardless with the activity | change with the change in level of activity |
Activity | one | multiple |
Nature | static | Dynamic |
Estimates | based on assumptions | realistic and practical |
Rigidity | Fixed or static budget cannot be modified | Flexible budget can be modified easly according to level of activity |
accurate | more accurate when compared to flexible budget | less accurate when compared to static budget |
elasticity | in elasic, as it cannot be re-casted | elastic that is it can be easily adjusted |
Cost ascertainment | not possible to ascertain cost if actual and budget levels vary | the same can be ascertained in flexible budget |
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