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Is a flexible budget a poor benchmark?

"The flexible budget is a poor benchmark. You should develop a budget and stay with it." Discuss this concept..

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In a stagnant world, an unchangeable budget would be a good idea, but the business world is always changing in respect to the total markets and to the piece of the market cornered by a company. A static budget presumed that management had the insight and the knowledge to accurately forecast market conditions to some point in the future. Managers would like to be exactly correct with their forecasting, but unforeseen conditions can modify the best of plans.

There is some truth in staying with a budget provided the basic elements on ...

Solution Summary

In a 359 word solution, the case for the static versus the flexible budget is discussed including examples to demonstrate the concepts.