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Flexible Budget and Variable Costs Explained

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"The flex in the flexible budget relates solely to variable costs." Do you agree? Explain.

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Response desribes the concept of Flexible Budget

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"The flex in the flexible budget relates solely to variable costs." Do you agree? Explain.
Flexible budget is a budget which is adjusted for the actual level of output, revenue, or cost driver. (Pearsoned, 2009) Hence Flexible budgets matches or relates the estimated expenses to estimated revenue. "For example if a business greatly exceeded the sales goal, it is reasonable to expect costs to also exceed planned levels. After all, some items like cost of sales, sales commissions, and shipping costs are directly related to volume. A flexible budget is one that reflects expected costs as a function of business volume; when sales rise so do ...

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