Fixed and Flexible Budget.

Q67. Differentiate between fixed budget and flexible budget.
Ans.

  1. Fixed Budget is prepared for a fixed level of activity and cannot be changed. Flexible Budget can be changed for any activity level.
  2. Fixed Budget does not classify expenses into fixed and variable. Flexible Budget classify expenses into fixed and variable.
  3. If level of activity change, Fixed Budget is useless. Flexible Budget can be changed as per level of activity change.

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