Flexible Budget Research
Introduction
A budget is considered as a standard to facilitate control work activities of the organization. Budgets are planning tools prepared firstly to start the period being budgeted. Valuable information about the performance contains of the difference between the actual results and the planning budgets. Therefore, budgets are both planning tools and performance evaluation.
The most common important element in budget is some measure of anticipated output such as the number of units to be produce, the number of units to be sold, the cost of good sold_direct material, direct labor, overhead cost,.. need in production, selling and administrative expenses,….
The flexible budget is a performance evaluation tool which can not be prepared before the end of period being budgeted. It adjusts the static budget for actual level of output. Questions appeared in mind when you are going to construct a flexible budget are “If I had known at the beginning of the period what my units produce or units sold would be, what would my budget have looked like?”. So, a budget is very essential for evaluating the efficiency of organizations (from manufacturing business to service business) It provides a general direction for performing activities, help the business minimize the waste and redundancy. More importantly, a great budget makes company reduce the impact of change in order to give the right actions timely.
Our paper presents the overview of flexible budget, steps to build up a flexible budget, and the effects of flexible budget in reality. Our study provides some useful information to establish strategies attaining the organizational goals. To manage well a corporation, the management of company should set up an accurate budget for different types of value creation led to evaluate the income of company in future.
I/ The overview of flexible budget 1. Definition: A flexible budget (dynamic budget) is a budget which is designed to
A budget is considered as a standard to facilitate control work activities of the organization. Budgets are planning tools prepared firstly to start the period being budgeted. Valuable information about the performance contains of the difference between the actual results and the planning budgets. Therefore, budgets are both planning tools and performance evaluation.
The most common important element in budget is some measure of anticipated output such as the number of units to be produce, the number of units to be sold, the cost of good sold_direct material, direct labor, overhead cost,.. need in production, selling and administrative expenses,….
The flexible budget is a performance evaluation tool which can not be prepared before the end of period being budgeted. It adjusts the static budget for actual level of output. Questions appeared in mind when you are going to construct a flexible budget are “If I had known at the beginning of the period what my units produce or units sold would be, what would my budget have looked like?”. So, a budget is very essential for evaluating the efficiency of organizations (from manufacturing business to service business) It provides a general direction for performing activities, help the business minimize the waste and redundancy. More importantly, a great budget makes company reduce the impact of change in order to give the right actions timely.
Our paper presents the overview of flexible budget, steps to build up a flexible budget, and the effects of flexible budget in reality. Our study provides some useful information to establish strategies attaining the organizational goals. To manage well a corporation, the management of company should set up an accurate budget for different types of value creation led to evaluate the income of company in future.
I/ The overview of flexible budget 1. Definition: A flexible budget (dynamic budget) is a budget which is designed to