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Understanding Flexible Budgets/Strategic and Financial Planning

- What are the roles played by a budget and how many budget types are available?
- Under what conditions is a flexible budget likely to be more effective than a forecast budget?
- What is your understanding of strategic planning and financial planning?
- What if financial planning is not aligned with strategic planning? What are the consequences?

Solution Preview

Budgets play a number of roles. Their primary role is to assist with the planning for resources and activities and communicating those plans across the organization. However, budgets can also help to coordinate across departments, create buy-in with managers, educate teams about initiatives and cost behaviors, and act as an authorizing document to control resources.

There are many types of budgets. The typical master budget includes a production budget, labor budget, materials budget, overhead budget, operating budget, cash budget, budgeted income statement, budgeted balance sheet and budgeted cash flow statement. The beginning of the year budget is usually the static budget. At the end of the year, firms can create a flexible budget to review ...

Solution Summary

Your tutorial is 403 words and two references and describes manufacturing, operating, financial and strategic budgets and their roles. Best uses for flexible budgets are given.

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