Difference Between Master Budget and Flexible Budget

The key difference between master budget and flexible budget is that master budget is a financial forecast that contains all budgeted revenues and costs for the upcoming accounting year whereas flexible budget is a budget that is adjusted by incorporating the changes in the number of units produced.

1. What is a Master Budget?
2. What is a flexible budget?
3. What is flexible budget example?
4. What is a master budget and what is its purpose?
5. What are the 3 types of budgets?
6. What are the two classifications of master budget?
7. What is flexible budget formula?
8. What does a flexible budget look like?
9. What are three types of flexible expenses?
10. What are the 5 basic elements of a budget?
11. What are the characteristics of flexible budget?
12. When should flexible budget be used?

What is a Master Budget?

A master budget consists of a projected income statement (planned operating budget) and a projected balance sheet (financial budget) showing the organization's objectives and proposed ways of attaining them.

What is a flexible budget?

A flexible budget adjusts to changes in actual revenue levels. Actual revenues or other activity measures are entered into the flexible budget once an accounting period has been completed, and it generates a budget that is specific to the inputs.

What is flexible budget example?

This type of budget is most often based on changes in a company's actual revenue and uses percentages of revenue rather than static numbers. For example, a flexible budget may allot 25% of a company's revenue to salary as opposed to allotting $100,000 to salary in a given year.

What is a master budget and what is its purpose?

A master budget includes all of the lower-level budgets within an organization, as well as cash flow forecasts, budgeted financial statements, and a financial plan. It gives a firm a broad overview of its finances and is often used as a central planning tool.

What are the 3 types of budgets?

Depending on these estimates, budgets are classified into three categories-balanced budget, surplus budget and deficit budget.

What are the two classifications of master budget?

Types of Budget Based on Time

Based on time factor budgets can be classified into two types; Long-term Budget, and. Short-term Budget.

What is flexible budget formula?

To compute the value of the flexible budget, multiply the variable cost per unit by the actual production volume. Here, the figure indicates that the variable costs of producing 125,000 should total $162,500 (125,000 units x $1.30).

What does a flexible budget look like?

In its simplest form, the flex budget uses percentages of revenue for certain expenses, rather than the usual fixed numbers. ... Consequently, a more sophisticated format will also incorporate changes to many additional expenses when certain larger revenue changes occur, thereby accounting for step costs.

What are three types of flexible expenses?

Flexible expense examples include groceries, dining out, entertainment, and even utilities.

What are the 5 basic elements of a budget?

All basic budgets have the same elements: income, fixed expenses, variable expenses, discretionary expenses and personal financial goals. By combining these elements, a person can create a simple monthly budget.

What are the characteristics of flexible budget?

The important characteristics of flexible budget can be pointed as follows:

• Wide Range. Flexible budget covers a range of activities because it is prepared to show the expected cost and revenue for different levels of activities.
• 2.. Flexibility. ...
• Performance Evaluation. ...
• Changes. ...
• Replace Of Static Budget.

When should flexible budget be used?

For costs that vary with volume or activity, the flexible budget will flex because the budget will include a variable rate per unit of activity instead of one fixed total amount. In short, the flexible budget is a more useful tool when measuring a manager's efficiency.