Flexible budget is a budget that is mostly used as a static budget….Disadvantages
- This budget requires skilled workers to work on it.
- It depends upon the proper accounting disclosures.
- It is an expensive affair.
- It also depends upon the factors of the production, which are not in the hands of the management.
What are the disadvantages of zero based budgeting?
The major advantages are flexible budgets, focused operations, lower costs, and more disciplined execution. The disadvantages include the possibilities of resource intensiveness, being manipulated by savvy managers, and bias toward short-term planning.
What is a disadvantage of the bottoms up approach to budgeting?
Transcribed image text: What is a disadvantage of the “bottoms-up” approach to budgeting? When lower management is part of the budgeting process they are less likely to “buy into it” O It is time consuming and therefore more costly.
What are the advantages and disadvantages of flexible budgeting?
Pros and Cons of Flexible Budgeting
| Pros | Cons |
|---|---|
| Better enables businesses to pursue new opportunities and mitigate risk | Predictions have a shorter lifespan — months rather than quarters |
| More accurately reflects the state of finances | Less accountability to adhere to original budget |
| Accounts for unexpected expenses |
How many ways can you prepare a flexible budget?
three methods
There are three methods of preparing a flexible budget: Tabular Method or Multi-Activity Method. 2. Charting Method.
What is a zero-based budgeting process?
Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be justified for each new period. The process of zero-based budgeting starts from a “zero base,” and every function within an organization is analyzed for its needs and costs.
Which of the following is an advantage of zero-based budgeting?
Which of the following is an advantage of zero−based budgeting? Zero−based budgeting forces managers to justify each dollar in the budget to ensure that some expenses are lower in a current year compared to what they were in previous years.
Why do variances occur?
A budget variance is an accounting term that describes instances where actual costs are either higher or lower than the standard or projected costs. Variances may occur for internal or external reasons and include human error, poor expectations, and changing business or economic conditions.
Which one of the following is an advantage of using participative budgeting?
One of the advantages of participative budgeting is the sharing of information from departmental-level managers to top management. It means that subordinate managers are given the opportunity to present their views on certain organizational issues.
Does budgeting actually help?
If you want to save more money, budgeting might not be the best strategy. As long as you establish how much you need to save each month for retirement, your emergency fund and any other big, future purchases, and you actually set that amount aside, you don’t have to budget at all.
What is difference between fixed and flexible budget?
A fixed budget is a budget that doesn’t change due to any change in activity level or output level. The flexible budget is a budget that changes as per the activity level or production of units. The fixed budget is static and doesn’t change at all. A fixed budget is always fixed.
Which is the most likely purpose of budgeting?
The purpose of budgeting is to provide a financial framework for the decision making process i.e. is the proposed course action something we have planned for or not. In managing a business responsibly, expenditure must be tightly controlled.
What is the purpose of flexible budget?
The flexible budget can be used for the determination of budgeted sales, costs, and profits at different activity levels. It helps the management to decide the level of output to be produced in order to generate profits for the business based on budgeted cost at different activity levels and budgeted sales.
What are the uses of flexible budget?
Flexible budgeting can be used to more easily update a budget for which revenue or other activity figures have not yet been finalized. Under this approach, managers give their approval for all fixed expenses, as well as variable expenses as a proportion of revenues or other activity measures.
