Explore BrainMass
Share

Explore BrainMass

    Flexible budget lends itself to cost-volume-profit analysis

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Discuss how a flexible budget lends itself to cost-volume-profit analysis.

    © BrainMass Inc. brainmass.com October 10, 2019, 12:41 am ad1c9bdddf
    https://brainmass.com/business/cost-volume-profit-analysis/flexible-budget-lends-itself-cost-volume-profit-analysis-301756

    Solution Preview

    Dear student,

    Discuss how a flexible budget lends itself to cost-volume-profit analysis.

    Definition:--A flexible budget is a budget that is a function of one or more levels of activity. Thus, the budget depends on one or more measures of activity volume rather than being fixed in amount.

    Flexible budget is the budget which denotes the sales, fixed costs and variable costs for the different levels of production. Fixed costs are costs which remain constant in total for the different levels of utilization of present capacity. Example: rent of factory building. Fixed costs would change only if there is change in capacity by acquisition of additional fixed assets. Fixed cost per unit will increase or decrease if there is reduction or increase in the level of production. On the other hand, variable costs would change directly in proportion to the levels of production. Example: direct ...

    Solution Summary

    The expert discusses how a flexible budget lends itself to cost-volume-profit analysis.

    $2.19