static budgets and flexible budgets


Budgeting is a tool used by management for performing the functions of planning, coordinating, and controlling operations of a business. Our textbook, Managing Accounting Concepts, describes 2 main types of budgeting: static budgets and flexible budgets.

write a minimum of 175 words:

Differentiate between the 2 types of budgets.

Provide an example of the type of business or company that would benefit from using a flexible budget.

Provide support for your business selection and include the advantage for using a flexible budget over a static budget.


Budgets serve as a key tool used in many organizations to manage the allocation of resources and track the financial performance of a business. In this essay, we will examine the advantages and disadvantages of static and flexible budgets, and compare and contrast the two to help understand when each type of budget may be best used.
Static budgets are a traditional form of budgeting where revenues and expenses are planned in advance. This type of budgeting is beneficial in that it allows organizations to plan expenditures and revenue streams accordingly, as well as provide a framework for measuring performance (Hansen et al., 2003). However, static budgets also have their disadvantages. A key disadvantage is that they are often too rigid and can’t account for changes in the market or environment. Additionally, static budgets make it difficult to adjust for unforeseen circumstances or unplanned events, which can lead to a budget shortfall (Hansen et al., 2003). As such, many organizations are turning to more flexible budgeting models that provide greater flexibility and allow for more accurate budgeting. Despite their drawbacks, static budgets remain a popular budgeting option for many organizations due to their simplicity, and can be beneficial if properly managed.
Flexible budgets have been a topic of much discussion and debate in the accounting world due to their potential utility and drawbacks (Mak & Roush, 1994). Advantages of flexible budgets are that they are able to account for changes in activities or operations that may cause fluctuations in the budget. This allows budget holders to respond to changes in production or sales more quickly and accurately. Another advantage of flexible budgets is that they can help managers to better allocate resources by adjusting the budget to fit the expected production or sales. Furthermore, flexible budgets can also help managers to identify and correct inefficiencies in their operations. On the other hand, there are some drawbacks associated with flexible budgets. One of the primary criticisms is that flexible budgets can be difficult to create and maintain due to the complexity of the calculations involved. Additionally, there is a risk that managers may be too focused on short-term goals, as opposed to long-term objectives, when adjusting the budget. Furthermore, managers may also be tempted to overspend when they have the flexibility to do so, leading to budgetary overruns. In conclusion, flexible budgets can be a useful tool for businesses and organizations, but must be used with caution due to the potential drawbacks. Managers must carefully consider the advantages and disadvantages of implementing a flexible budget and make sure that it is the right decision for their organization.
Static budgets are budget plans that do not change over time, no matter the circumstances. As Pollak and Wales (1992) explain, this budget type is often used to establish a baseline of expected costs. However, static budgets can be inappropriate for businesses that experience fluctuations in their sales or costs. Flexible budgets are much better suited to these types of organizations, as they are designed to accommodate changes in cost or revenue throughout the year. Flexible budgets are typically based on expected changes in production levels, and they adjust the cost level of each budget item accordingly. This allows organizations to remain more financially prepared for unexpected changes in their operations. By contrast to static budgets, flexible budgets can provide organizations with a better understanding of how their costs and revenues vary over time. This can help businesses make better decisions and remain more financially secure.
A static budget remains fixed throughout the period and is used to plan, monitor and control expenditure. On the other hand, a flexible budget adjusts to actual level of activity and therefore the budgeted cost of activities will vary accordingly. Both budgets have advantages and disadvantages and should always be used according to the organization’s particular needs. Therefore, it is essential for organizations to consider the tradeoff between a static and a flexible budget when choosing the right tool to manage their finances.
Work Cited
YT Mak.”Flexible budgeting and variance analysis in an activity-based costing environment.”
SC Hansen.”Practice developments in budgeting: an overview and research perspective.”
RA Pollak.”Demand system specification and estimation.”

Get Assignment Help- Confidentially!

Why Choose Ace Writing Center?

***Absolutely NO Plagiarism.

***All writing is original.

***Guaranteed Top Grade.

***24/7 Support

***100% Money Back Guarantee

***Free revision

Get 20% Discount on This Paper
Pages (550 words)
Approximate price: -

Try it now!

Get 20% Discount on This Paper

We'll send you the first draft for approval by at
Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

Ace Writing Center has stood as the world’s leading custom essay writing services providers. Once you enter all the details in the order form under the place order button, the rest is up to us.


Essay Writing Services

At Ace Writing Center, Nowadays, students normally have extremely busy schedules. You will note that some of them have to take on some evening or weekend jobs in order to get some income that can help them to sustain in college or in the university. This can deny them a chance to write all the essays given. Others usually get bombarded with a lot of work by their lecturers. This can still delay such students from working on all their essays. However, some of them usually try to work on all these essays but end up delivering their work late. This can prevent them from graduating since most lecturers are strict on deadlines. If you want to write a business essay, the wise way is to hire an outstanding essay writing service like us, so that you can get the best results. If you are keen, you will note that many companies usually overcharge their customers. Some of them are there only to make money. And in reality, they really don’t care to build a long term commitment with students. You should not choose such companies. You should take your time and choose a reliable company to work with. Ace Writing Center is the ultimate solution for you. We have been offering our writing service for more than 7 years. This is a clear indication that you will get quality essay writing service. We have a wide range of writers who can work on any business essay that you might have. We believe in doing extensive research so that we can provide quality work to all our clients. .


Admission and Business Papers

Have you ever had to write an admission essay for college? The majority of students face the same issues when applying to a university or college and many in such situations decide they need professional help to cope with this matter. They get in a situation when the deadline keeps coming closer but lack motivation to start because they are just not sure if their writing skills are strong enough. We have a solution for you! Ace Writing Center is the best admission essay writing service with a large professional team and years of experience in providing high-quality papers to students of all levels and faculties. The mission of our team is to help students make their dreams of entering a good college come true and that’s what we offer!.


Editing and Proofreading

Sometimes all the words for your paper just flow out of your mind and into your fingers. You type quickly at your keyboard and there they are, your beautiful words right there on the screen. But you have no idea how to polish it up. You may be wishing there was a paper writing service that offered this type of writing service. Look no more! Here at Ace Writing Center, we offer you an editing and proofreading option that you can't find anywhere else..


College Essay Writing

In case you are familiar Ace Writing Center, you know the way to distinguish a better company from a cheap one exactly. First of all, poor service website does not have a sufficient support. We think support team is an essential part of success; it has to answer all clients’ questions and be a connecting link between clients and their writers. On our web-service you will get answers about anything you need and your writer will receive all your instructions, assignments and requirements exactly and swiftly. A writing service that we run has got a flexible pricing system that will save you from senseless wastes and many bonus systems that let you sparing money for something important for you.

Open chat
Hello. Can we help you?