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Budget more useful: flexible or static?

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Which budget type do you think is more useful: flexible or static? Which one should companies use?

Why is benchmarking useful? Do you use benchmarking in personal life?

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Solution Summary

Which budget types, either flexible or static, is the most useful is determined. Benchmarking is defined.

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I think flexible budgets are more useful because they indicate what you should have spent given the activity that occurred. I would not be impressed if the accounting manager was under budget by 10% but the reduction in force means that there were half as many plants and employees to serve than initially expected when the budget was created! A flexible budget re-sizes the variable portion of the budget to what you should have spent given the level of activity. ...

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Carol Sargent, PhD
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  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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