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Flexible Budgets

8-2 "The flex in the flexible budget relates solely to variable costs." Do you agree? Explain

8-3 "We want a flexible budget because costs are difficult to predict. We need the flexibility to
change budgeted costs as input prices change." Does a flexible budget serve this purpose?

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No I do not agree. The flex in flexible budget pertains to the units of product sold. Yes, this units of product sold does translate to variable cost in some respect, but it impacts other expenses as well. In a flexible budget you ...

Solution Summary

The solution does a great job of explaining the concepts being asked in the question. The solution is very well explained and detailed. A good response for anyone looking to get a deeper understanding of the managerial accounting concepts. Overall, an excellent response.