Flexible Budgeting

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Describe briefly what advantages there would be for a firm if it adopts a system of flexible budgeting.

A flexible budget is defined as follows:

A flexible budget is a budget which by recognizing different cost behavior patterns is designed to change as volume of output changes.

It is also known as variable or sliding scale budget.

For preparation of flexible budgets, items of cost have to be analyzed individually to determine how different items of cost behave to changes in volume. ...