Fixed and Flexible Budget
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Compare bottom-line financial results of using a fixed budget and a flexible budget if volumes (a) increase by 10% or (b) decrease by 10%.
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The bottom line financial results will vary considerably if we use a fixed budget rather than a flexible budget.
(a) If the volume increased by 10%, then the fixed budget would show a negative variance. This is because all there will be an increase in variable costs associated ...
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